Will Eric Schmidt have to sell his stake in Google?
Rumor has it that Google's Chairman, Eric Schmidt is on the short-list for the job of Secretary of Commerce. If he is asked to fill the job, he may be forced to make a huge, multi-billion dollar decision.
All presidential employees have to go through a vetting process, and they aren't allowed to hold a significant stake in a company that might have a conflict of interest with the government. If they do, they have to sell off those stocks. For Google's CEO, this would be a tough financial decision, and one the even the best financial advisers might not agree on.
As part of the betting process, the nominee has to be approved by the agency they will be working with, the White House and the Office of Government Ethics. If the nominee has assets or securities that could benefit from any decisions they may make in their position, they would have to sell those assets before getting the job. For Schmidt, he would most likely have to sell off his share in Google.
Schmidt has more than 9 million shares of Google currently, which works out to be almost $5 billion. Which is not something to take lightly. According to the Federal law, he would have to sell off his stock within 90 days. His only other option would be to place the shares in a blind trust, where they will be sold off and replaced with other investments that wouldn't present a conflict in his work with the government. He would also have to excuse himself from any decisions that might pose a conflict between the government and Google's business.
The silver lining, however, would be that if he were to be forced to sell his stake in Google, he would be excused from paying capital gains tax because he was forced to sell. This tax loophole exists to keep qualified personnel in the executive branch from being punished for taking office.
While I would imagine that it would be difficult for him to get rid of his Google shares, he would stand to save tens of millions of dollars by selling while he can avoid the tax.
What do you think Eric Schmidt should do? Let me know in the comments.
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By Melissa Kennedy- Melissa is a 9 year blog veteran and a freelance writer for FinancialJobBank. Along with helping others find the job of their dreams, she enjoys computer geekery, raising a teenager, supporting her local library, writing about herself in the third person and working on her next novel.
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