Alphabet structures three-year compensation deal for Sundar Pichai

Alphabet has structured a three-year compensation deal for its Google CEO, Sundar Pichai. The new pay package could be worth $692 million, which would make him one of the highest-paid executives. However, the deal is structured so that most of the compensation is tied to performance. Rather than receiving a flat salary, Pichai’s ultimate payout depends on meeting specific performance metrics. This structure ensures that the CEO’s incentives are aligned with the long-term performance of the company’s key business units, rather than guaranteed payouts.

These performance metrics are tied to stock incentives linked to Alphabet subsidiaries, specifically the autonomous driving subsidiary Waymo and the drone delivery venture Wing. This structure connects the CEO’s compensation directly to the progress of these specific business units. The new package adds to the substantial holdings Pichai has accumulated since he took the helm at Google in 2015. According to calculations by Bloomberg, Pichai had sold an estimated $650 million in stock as of last summer. In addition to those sales, he currently holds shares worth nearly $500 million, reflecting the significant value he has accumulated during his tenure.

While Pichai remains in California, Google founders Larry Page and Sergey Brin have been purchasing real estate in Miami, Florida. These purchases are widely seen as a response to California’s proposed Billionaire Tax Act. The proposed ballot initiative would impose a 5% levy on net worth exceeding $1 billion, targeting roughly 200 billionaires in the state. The founders’ acquisitions in Florida represent a significant shift in their property holdings away from California, as they acquire substantial real estate assets in a different state.

The scale of the founders’ real estate purchases in Florida is substantial:

• Larry Page has spent over $173 million on property purchases in Miami, Florida.
• Sergey Brin recently purchased a property valued at $51 million, which follows two earlier property purchases in the area totaling $92 million.

This divergence in real estate activity highlights a contrast between the CEO and the founders. While Pichai continues to hold his shares and remain in California, the founders are actively purchasing properties in Florida. This shift comes as California considers new tax measures that would impact the state’s wealthiest residents, while Alphabet continues to issue large, performance-based compensation packages to its top leadership.

Why it matters

Alphabet is incentivizing its CEO with a massive, performance-based package while its founders are diversifying their assets away from California. This highlights a divergence in how the company’s leadership is navigating the state’s regulatory environment.