What does it mean when a CEO divests himself from a lot of stock in the company he leads?

With Google's Eric Schmidt selling nearly half of his holding in, er, Google, we turned to Yahoo!Answers for a succinct explanation.

No surprises there, either: “He/she knows that the stock is near a top that cannot support the upcoming financials (buy low, sell high), or he/she needs a new boat, car, house, vacation, etc., or he/she needs lighten up to diversify into some other asset class.

Thanks Jazz8. The bit that any CEO worth his salt will immediately use to describe as his own motivation has nothing to do with the ‘near a top that cannot support the upcoming financials', and we're pretty sure Schmidt has plenty of ready cash for ‘a new boat, car, house, vacation, etc.,'.

No, the sensible thing to do is to claim the sale is solely motivated by the ‘diversify into some other asset class' bit.

True to form, the Securities and Exchange Commission filing confirms that Schmidt is doing just that.

It says ‘The pre-arranged trading plan was adopted in order to allow Eric to sell a portion of his Google stock as part of his long-term strategy for individual asset diversification and liquidity.

The stock transactions pursuant to this trading plan will be disclosed publicly through Form 4 and Form 144 filings with the U.S. Securities and Exchange Commission.

Using this trading plan, Eric can diversify his investment portfolio and can spread stock trades out over a period of one year to reduce market impact.'

The comments on ZDNet's story make for amusing, if not entirely accurate reading. They include such observations as ‘Google sucks.

Even the chairman knows that'; and (astoundingly) ‘The clown who screwed-up Novell and Sun... Now that Google share prices are at its high, its good time for this clown to take his money and run...Google has no long term future and would at some point get exterminated by Microsoft'.

Steve Ballmer has famously laughed at Google's Chrome OS in the past, which is seen by many as a ringing endorsement which often propels the source of hilarity to great success. Ballmer also described Google as ‘not a real business'.

Real or not, Schmidt's sale of 3.2 million shares of Class A common stock (out of his total holding of 7.6 million shares) at around US$782.50 will net him a cool US$2 504 000 000 and some change.

And that is a real Schmidt-house of money.