MediaFile

It’s been less than a week since Google reset the price of employee stock options in order to provide “better incentives for employees to remain at Google.”

Apparently Google’s President of Americas Operations Tim Armstrong didn’t get the memo.

On Thursday, Time Warner announced that Armstrong is leaving the Googleplex to take the top job as CEO of AOL.

Armstrong is one of the highest-ranking Googlers to jump ship in Google’s history. Last year, Sheryl Sandberg, who was VP of online sales and operations, moved to social networking site Facebook, though analysts scratched their heads to think of any other defections of that magnitude.

Like Sandberg, Armstrong had been at Google since before its monster 2004 IPO, meaning that most of his stock options with pre-IPO prices have likely vested — at a significant profit — by now.

The potential payoff for options granted in recent years may prove more modest. Google recently said that 85% of its employee stock options were “underwater,” meaning that the exercise price was higher than the actual market price. That’s why the company allowed workers and executives to swap underwater options for new options with a strike price of $308.57, the closing price last Friday.

Of course, the newly priced options tack an extra year on to the vesting schedule.

For Armstrong at least, the new set of golden handcuffs weren’t strong enough.

(Photo courtesy of Google)