Floating underwater

Google and Morgan Stanley have devised a fascinating fix for the flaw in employee options: making them liquid through an online auction. With the momentum of Google’s stock price slowing, the search giant wants to eliminte the illiquidity of options it grants non-executive employees by creating a market where they can be traded. The new instrument, called TSOs for Transferrable Stock Options, would be traded exclusively through Morgan Stanley. Instead of motivating employees, underwater options...