Information on Our New Class of Shares

On January 29, 2014, our Board of Directors approved the issuance of the Class C stock dividend and set March 27, 2014 as the record date. The Class C stock dividend had an April 2, 2014 issuance date, and shares began trading on April 3, 2014.

Mechanics of Issuance

What ticker symbols do the stock classes have?

After the stock dividend was issued:

  • the new Class C stock will trade on the NASDAQ Global Select Market under the original symbol GOOG
  • Class A stock trades on the NASDAQ Global Select Market under the new symbol GOOGL
  • The Class B stock remains unlisted and is not publicly traded.

How were Class C shares allocated to investors who were stockholders on the record date?

Each holder of Class A stock and Class B stock on the record date (March 27, 2014) was entitled to receive shares of the new Class C capital stock on a one-for-one basis. For example, if an investor had 100 shares of Class A (GOOG) stock prior to the dividend issuance, the investor now holds 100 shares of Class A (GOOGL) stock plus 100 shares of Class C (GOOG) stock after the dividend issuance.

If I am a retail investor, do I need to do anything?

On April 2, 2014, each holder of Class A and Class B shares received shares of the new Class C capital stock on a one-for-one basis. No action is necessary.

Impact to Google’s Financial Statements

Do you expect to take any accounting charge as a result of this dividend?

We did not record an accounting charge as a result of the dividend issuance. The issuance of Class C shares resulted in a reduction of retained earnings and an increase in common stock. There was no change to the net equity of Google as a result of the Class C issuance.

Please click here for the impact on our financials regarding the Possible Adjustment Payment to Class C stockholders.

How and when will this start to impact the presentation of your financials? Will your EPS presentation change?

As a result of the issuance of the Class C stock dividend, we have twice as many shares as we did before (since all Class A and Class B shareholders received Class C shares on a one-for-one basis). This resulted in our EPS numbers being approximately halved (for all historical and current periods). In addition, as discussed below, if we are obligated to make a payment to Class C stockholders, EPS for Class C will differ from the EPS for Class A and Class B in the period we make the payment.

Index Investor FAQs

What are the major indices that include Google stock?

S&P500, Nasdaq 100, Russell 1000 and MSCI Standard indices.

What class of shares will be included in S&P 500, the Nasdaq 100 and other indices?

That is up to the S&P, Nasdaq and the other indexers. The S&P has issued a press release detailing their plans here. The Nasdaq has issued a press release detailing their plans here.

How will the rebalancing of the S&P 500, the Nasdaq 100, etc. work?

That is up to the S&P, Nasdaq and the other indexers. The S&P has issued a press release detailing their plans here. The Nasdaq has issued a press release detailing their plans here.

Adjustment Payment Information

Where can I find more information about the terms of the settlement related to the Class C shareholder litigation?

Please see an excerpt of the final stipulation of the court-approved settlement agreement that we filed with the SEC here.

How will the Adjustment Payment to Class C Capital Stockholders work?

In accordance with a settlement of litigation involving the authorization to distribute the Class C capital stock, we may be obligated to make a payment (the Adjustment Payment) to holders of the Class C capital stock if, on a volume-weighted average basis, the Class C capital stock trades below the Class A common stock during the first 365 days following the first date the Class C shares traded on NASDAQ (the Lookback Period), payable in cash, Class A common stock, Class C capital stock, or a combination thereof, at the discretion of our Board of Directors.

What is the “Lookback Period”?

The Lookback Period is defined as the 365-day period after the first day that the Class C stock was traded on NASDAQ.

What is your record date for the payment?

Our record date is April 2, 2015 as noted here.

What is your ex-dividend date for the Adjustment Payment?

(To be determined)

How is the ex-dividend date determined?

NASDAQ, the exchange where our shares are traded, will set the date.

When will the Adjustment Payment be made?

(To be determined)

What will be the amount of the Adjustment Payment?

(To be determined)

Will you be paying the settlement amount in cash, stock, or a combination thereof?

(To be determined)

How long after the “Lookback Period” until we find out more payment and timing details regarding the Adjustment Payment?

The amount of the Adjustment Payment will be calculated within 30 days of the Lookback Date and the Adjustment Payment will be issued no later than 90 days subsequent to the Lookback Date.

How will this impact your EPS in the relevant quarter?

At the end of the Lookback Period, the Adjustment Payment, if any, will be treated as a dividend to Class C shareholders. This impacts EPS; in particular, the Adjustment Payment will be allocated to the numerator for calculating net income per share of Class C capital stock from net income available to shareholders and any remaining undistributed earnings will be allocated on a pro rata basis to Class A and Class B common stock and Class C capital stock based on the number of shares used in the per share computation for each class of stock. This means that in the period we make the Adjustment Payment, the EPS for Class C will be different compared to the EPS for Class A and Class B.

For example, let’s assume that in the period we make the Adjustment Payment, we generated $1,000 of net income, and the Adjustment Payment itself is $100. Also, let’s assume that each class of stock has 300 shares outstanding during the period. In order to calculate Class C EPS, the EPS numerator will include the $100 Adjustment Payment plus the pro rata share of the undistributed earnings (i.e. ⅓ of $900 of remaining net income), or $400, divided by the denominator (i.e. Class C shares outstanding), resulting in an EPS of $1.33. For Class A and Class B, EPS is calculated by taking each class’ pro rata share of the undistributed earnings ($300 each) and dividing it by the respective Class A and B shares outstanding, resulting in an EPS of $1.00 each. Please note that this differential in EPS will only happen in the period that we make the Adjustment Payment.

Other Information

FOR FRENCH SHAREHOLDERS:

Why was French tax withheld when the Class C shares were issued on April 2, 2014 to French individual taxpayers?

Some (but not all) French banks -- which held Google shares for French individual taxpayers -- withheld tax when the Class C shares were issued because the banks misinterpreted the transaction as a taxable dividend paid in shares. Google’s tax advisors believe that the Class C issuance is non-taxable in France.

Will French shareholders be entitled to a refund of the tax that was withheld?

Google shareholders who had French tax withheld on the issuance of Class C shares may seek a refund from the French bank that withheld tax. Alternatively, shareholders may seek a refund from the French tax authorities. Each shareholder should review the process and timing for such a refund with their advisor or tax office.

If shareholders in France wish to seek a refund from their bank or the French tax authorities, what legal grounds should they provide to support their refund claim?

Shareholders seeking a refund for tax withheld on the Class C distribution may reference the following French tax code sections to help clarify that the issuance of the Class C shares was not taxable income but rather an issuance of shares by reduction of retained earnings (an extract of the French tax code sections are provided below in English and original French version; the entire code sections are available on www.legifrance.gouv.fr):

  • Section 112 - 7° of the French tax code, which provides that the following “is not taxable income: grant of shares as a result of incorporation of retained earnings into share capital.” “Ne sont pas considérés comme revenus distribués: l'attribution d'actions ou de parts sociales opérée en conséquence de l'incorporation de réserves au capital.”
  • Section 121 – 1 of the French tax code, which provides that “for the application of section 120 [which considers as taxable income a list of payments made by foreign companies to their shareholders]…, the incorporation of retained earnings into the share capital does not constitute a taxable event.” “Pour l'application de l'article 120, l'incorporation de réserves par une société étrangère à son capital social ne constitue pas un fait générateur de l'impôt sur le revenu.”

Each shareholder should consult with their tax advisor regarding obtaining a refund.

Any tax commentary included in this communication was not intended or written to be used, and cannot be used, for the purpose of avoiding tax liabilities and/or penalties. You should consult your own tax advisor regarding tax consequences of the issuance of Class C shares that apply to your particular jurisdiction and circumstances.

FOR GERMAN SHAREHOLDERS:

Why was German tax withheld when the Class C shares were issued on April 2, 2014?

According to the previous legal opinion of the German fiscal authorities, the issuance of Class C shares qualified as a so-called stock dividend for German tax purposes. Therefore, the deposit of Class C shares at a German bank was subject to a German withholding tax (Abgeltungsteuer).

What’s the latest status from the German fiscal authorities?

Due to Google’s efforts, as of early April 2015, the German fiscal authorities have recharacterized the tax classification of the Class C transaction. The transaction is now being treated as a tax neutral capital increase per Secs. 1 and 7 of the German Capital Increase Tax Act (Kapitalerhöhungs-steuergesetz). The German fiscal authorities will likely issue an official statement clarifying this issue and this statement is expected before the end of April or early May. We will provide an update when this statement is available.

Should I file an appeal?

If you have not filed your 2014 German tax declaration: we recommend you share the above information with your tax advisor so they are aware of the issue. The German authorities will provide further information on how to obtain a tax refund shortly and when they do, we will update this site.

If you have filed your 2014 German tax declaration and have received a tax assessment: please work with your tax advisor to determine if it is necessary to file an appeal regarding the tax treatment of Class C shares based on the above information. Note that this appeal is only for those who filed their 2014 tax return and already received an assessment. Under German law, shareholders have 30 days to appeal an assessment.

Any tax commentary included in this communication was not intended or written to be used, and cannot be used, for the purpose of avoiding tax liabilities and/or penalties. You should consult your own tax advisor regarding tax consequences of the issuance of Class C shares that apply to your particular jurisdiction and circumstances.

FÜR DEUTSCHE AKTIONÄRE

Warum wurde auf die Ausgabe der Aktien des Typs „Class C“ am 2. April 2014 in Deutschland dem Kapitalertragsteuerabzug unterworfen?

Nach bisheriger Auffassung der deutschen Finanzverwaltung wurde die am 2. April 2014 ausgegebenen Aktien des Typs „Class C“ als sogenannte Sachdividenden qualifiziert. Daher unterlag die Einbuchung der Aktien des Typs „Class C“ in ein bei einer deutschen Bank geführtes Depot grundsätzlich dem Kapitalertragsteuerabzug durch die depotführende Bank.

Wie ist die aktuelle Position der deutschen Finanzverwaltung?

Dank der Bemühungen von Google hat sich die deutsche Finanzverwaltung Anfang April 2015 den Argumenten von Google angeschlossen und behandelt die Ausgabe der Aktien des Typs „Class C“ nunmehr als steuerneutrale Kapitalerhöhung aus Gesellschaftsmitteln im Sinne der §§ 1, 7 Kapitalerhöhungssteuergesetz.

Sollte ich Einspruch einlegen?

Wenn Sie Ihre Steuererklärung für das Jahr 2014 noch nicht eingereicht haben: Wir empfehlen die obige Information Ihrem Steuerberater mitzuteilen, damit dieser den Sachverhalt steuerlich berücksichtigen kann.

Wenn Sie Ihre Steuererklärung für das Jahr 2014 eingereicht und einen Steuerbescheid erhalten haben: Bitte prüfen Sie vor dem Hintergrund der obigen Informationen zusammen mit Ihrem Steuerberater die Notwendigkeit des Einlegens eines Einspruches. Bitte beachten Sie, dass ein Einspruch nur in Betracht kommt, wenn die Steuererklärung für das Jahr 2014 eingereicht und ein Steuerbescheid erlassen wurde. Die Einspruchsfrist beträgt in Deutschland 30 Tage.

In dieser Mitteilung enthalte steuerlichen Ausführungen jedweder Art sind nicht dazu gedacht oder geschrieben um steuerliche Verpflichtungen oder Strafen zu vermeiden und darf auch nicht zu solchen Zwecken verwendet werden. Die steuerliche Würdigung der Ausgabe der Aktien des Typs „Class C“ sollte unter Berücksichtigung des in Ihrer Jurisdiktion geltenden Rechts sowie Ihrer individuellen Situation durch Ihren Steuerberater erfolgen.

FOR CANADIAN SHAREHOLDERS:

Why was Canadian tax withheld when the Class C shares were issued on April 2, 2014 to French individual taxpayers?

Our tax advisors believe that the dividend is taxable only on its par value (US$.001) and so is effectively non-taxable.

Please see Canada Revenue Agency's Interpretation Bulletin IT-88R2, dated May 31, 1991, (available on the CRA's public website) which discusses the tax treatment of stock dividends and notes that stock dividends are taxable on paid up capital (i.e., par value).

Please see Paragraph 20, which discusses the situation where a Canadian shareholder receives a stock dividend from a foreign corporation. Note that the draft legislation referred to in that paragraph was passed, so the discussion in paragraph 20 is generally only applicable to Canadian shareholders that are individuals.

(Please note that the Interpretation Bulletin is generally relevant for Canadian shareholders, other than Canadian corporations and Canadian mutual fund trusts, and the positions in the Interpretation Bulletin were those of the Canada Revenue Agency when the Interpretation Bulletin was issued,. Such positions are not binding and may be updated.)

Any tax commentary included in this communication was not intended or written to be used, and cannot be used, for the purpose of avoiding tax liabilities and/or penalties. You should consult your own tax advisor regarding tax consequences of the issuance of Class C shares that apply to your particular jurisdiction and circumstances.

FOR ALL SHAREHOLDERS:

Where can I find information related to cost basis allocation between Class C and Class A?

Please see Form 8937 that we filed with the IRS.