In a filing with the Securities and Exchange Commission (SEC), Google disclosed Schmidt will sell 3.2m shares. Google shares closed at $785.37 on Friday.
The plan would give Schmidt "individual asset diversification and liquidity", according to Google's filing with the SEC. The sale will be spread out over the year in order not to affect the company's share price.
Last year, Forbes magazine estimated Schmidt's net worth at $7.5bn. A long-term technology executive who has worked at Bell Labs, Xerox and Sun Microsystems, he generated most of his wealth at Google.
Schmidt stepped down as Google's chief executive in April 2011 after 10 years at the helm, to be replaced by company co-founder Larry Page. He owns about 7.6 million shares in the company, representing 2.3% of Google's outstanding stock.
Since stepping back from the day-to-day running of Google, Schmidt has become increasingly involved in politics. He was a major donor to Barack Obama's re-election campaign and had been considered a potential commerce secretary or chief technology officer.
The Google boss hit the headlines last week when it was revealed he had co-authored a book criticising the Chinese authorities. Google has clashed repeatedly with Beijing over censorship and alleged hacking.
Schmidt called China the world's "most sophisticated and prolific" hacker of foreign companies, in a book called The New Digital Age, which will be published in April.
The book, co-written with Jared Cohen, a former state department official who now runs a Google thinktank, brands China as the world's most dangerous superpower.
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image: © Aaron Parecki