Sundar Pichai was, for years, one of the world’s highest-paid corporate executives. Now he’s facing the opposite reality: No big paycheques at all.
The Google CEO hasn’t received an equity award in more than two years. A key reason is that Pichai turned down a big new grant of restricted stock in 2018 because he felt he was already paid generously, according to a person familiar with the decision. It’s unclear how much he passed up. But another giant payday – on top of hundreds of millions of dollars in previous awards – could have sparked new controversy.
Technology companies are being increasingly blamed for all sorts of societal ills – including rising income equality. Pichai, given the top job in 2015 for his engineering prowess, has had to address these concerns, while juggling a host of other politically charged issues.
“He may have looked at these numbers and said: ‘I’ve had enough’ – or he might just be trying to manage the optics of his pay,” said David Larcker, a professor who researches corporate governance at Stanford Graduate School of Business.
The board of Google parent Alphabet is scheduled to revisit the CEO’s pay later this year, said the person, who asked not to be identified discussing private matters. By then, almost all Pichai’s previous stock awards will have vested. That makes him an anomaly among US corporate leaders, and is even raising questions about what’s next for the 46-year-old. “Clearly there’s very little retentive effect left for Pichai,” said Fabrizio Ferri, at the University of Miami who studies executive pay.
A Google spokeswoman declined to comment, and said the Alphabet board won’t comment either. The company and its directors have said nothing publicly about the CEO leaving any time soon. Pichai has never mentioned moving on either. Google is known for its willingness to pay lavishly to attract and keep talented employees in the executive suite and beyond. Pichai had been among the top benefactors.
In 2014, shortly before Pichai was promoted to take over many of Google co-founder Larry Page’s responsibilities, he received restricted stock worth about $250m (€224m). The following year, when he became Google CEO, he got $100m of stock. And in 2016, another grant worth almost $200m.
That was the year the Google CEO job began to morph from a technical leadership role into a political minefield.
Employees marched in protest of President Donald Trump’s immigration plan in early 2016. Less than a year later, a memo from James Damore, a Google engineer claiming the company was biased against conservatives, exploded into a national scandal.
In 2018, Google workers revolted over a military contract and a proposed censored search engine in China. Later that year, thousands of staff walked out after discovering the company had given big bonuses to executives accused of sexual harassment. At a staff meeting earlier this year, one Google worker asked why Pichai was paid hundreds of millions of dollars, while some staff struggle to afford to live in Silicon Valley.
The criticism has been just as loud from outside the company. Google is facing multiple antitrust investigations around the world, and rising scrutiny in the US over its size, power and access to personal data. Co-founders Page and Sergey Brin, have stepped away from day-to-day management, and former CEO Eric Schmidt, who used to handle politics, is leaving the board.
On December 11, just over three years after taking the CEO job, a noticeably grayer Pichai sat before Congress being questioned about the political slants of his staff and algorithms, Chinese censorship and surveillance, and even a conspiracy theory about Hillary Clinton that spread on Google’s YouTube.
“Sundar is ageing quickly,” said Matt McGowan, a former Google executive who left in 2016. “When you have a billion customers around the world, there’s always going to be hundreds of people who disagree with your decisions. And they’re loud.”
People who have worked with Pichai describe him as a consensus-builder who shies away from conflict. Key parts of the CEO job nowadays, like testifying before Congress and policing internal rancour, are not his favourite. “He’s not a well-seasoned CEO who has been through these types of crises before. But he appears to be learning quickly,” McGowan said.
Pichai has revived revenue growth at Google, helping shares of parent Alphabet rise more than 50pc since he took over.
However, the company missed Wall Street estimates last quarter and the CEO frustrated analysts on a recent conference call. Reputation Institute, a management consultant, ranked Pichai first among major CEOs last year. This year, Pichai fell out of the top 10.
Since that big 2016 stock award, Pichai has collected a $650,000 annual salary and typical CEO perks such as the cost of personal security. As of yesterday’s close, he had 51,249 unvested Google shares, worth about $58.1m, left to earn. They will vest in June, September and December, regulatory filings show.
Bloomberg
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