Consider a high-profile late-comer to Google who might have an existing equity position not comparable to peers who were there for the IPO, or peers who had hired in early (e.g., his grants were at pre-bailout highs and only recently recovered). Accepting a $3.5 million counter-offer means that the immediate "sure thing" is greater than or equal to the expected value of Facebook's offer when the risk of Facebook falling short is taken into account. Say this engineer thought there was only a 50% chance of Facebook actually hitting their "quietly told" market cap. That would imply the Facebook offer was something in the $5-$7 million range, or 1/15000th to 1/20000th of the outstanding shares. For recruiting a big name, this is much more plausible amount to offer than the 1/10 of 1% in the story.
If the story is true, then I'd bet that the engineer is someone who came to Google late (or at the wrong time), probably is pretty comfortable with his standing at Google is someone fairly prominent, and is more comfortable taking a stable, sure thing than taking a risk on a situation as early in the company life-cycle as Facebook is. (And it wouldn't surprise me to see this engineer leave for Facebook 5 years from now if and when Facebook becomes a more mature company and more of a sure thing.)
Consider a high-profile late-comer to Google who might have an existing equity position not comparable to peers who were there for the IPO, or peers who had hired in early (e.g., his grants were at pre-bailout highs and only recently recovered). Accepting a $3.5 million counter-offer means that the immediate "sure thing" is greater than or equal to the expected value of Facebook's offer when the risk of Facebook falling short is taken into account. Say this engineer thought there was only a 50% chance of Facebook actually hitting their "quietly told" market cap. That would imply the Facebook offer was something in the $5-$7 million range, or 1/15000th to 1/20000th of the outstanding shares. For recruiting a big name, this is much more plausible amount to offer than the 1/10 of 1% in the story.
If the story is true, then I'd bet that the engineer is someone who came to Google late (or at the wrong time), probably is pretty comfortable with his standing at Google is someone fairly prominent, and is more comfortable taking a stable, sure thing than taking a risk on a situation as early in the company life-cycle as Facebook is. (And it wouldn't surprise me to see this engineer leave for Facebook 5 years from now if and when Facebook becomes a more mature company and more of a sure thing.)