03/28/2008 02:46 am ET Updated May 25, 2011

Google's New Problem: Paying Its People

How quickly we fall from grace. As Google's stock continues to fall, its problems continue to mount:

* Concerns about recession exposure
* Concerns about dependence on a single product whose growth cycle is coming to an end.
* Concerns about lack of focus, lack of spending discipline.
* Concerns about senior executives cashing out and jumping ship (see Sheryl Sandberg)

And now...

* Concerns that underwater stock options and a falling or flat stock price will force an increase in cash and/or restricted stock compensation, putting additional pressure on margins.

One of the reasons Google's stock multiple is compressing (in addition to all of the above) is that the company's operating margin has declined steadily over the past year. If the company is forced to provide higher cash comp or more restricted stock to reward and retain employees, this will put even more pressure on margins.

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