Sundar Pichai could receive $700M pay package from Alphabet
What's the story
Sundar Pichai, the CEO of Alphabet, is in line for a massive pay package that could go up to $692 million over the next three years, according to The Financial Times. This would make him one of the highest-paid CEOs in the world. A large part of his compensation is linked to performance stock units (PSUs) with a target value of $126 million.
Pay breakdown
PSUs split into 2 equal parts
The PSUs are split into two equal parts, with the final payout dependent on Alphabet's performance against S&P 100 index companies. If Alphabet outperforms its peers, Pichai could earn up to $252 million from this part of his compensation package. However, if the company's performance is weak, he could get nothing from it.
Compensation details
Annual salary to remain at $2 million
Along with the PSUs, Pichai will also get $84 million in restricted stock over the same three-year period. These shares will vest monthly as long as he remains with Alphabet. His annual salary is set to remain at $2 million during this time. This part of the compensation package is not performance-based but rather a fixed component of his pay.
Board statement
Alphabet board defends decision to further incentivize Pichai
Alphabet's board defended the decision to incentivize Pichai further, saying that Waymo and Wing Aviation are making great strides in autonomous driving and delivery under his leadership. They said "Further incentivising Mr Pichai is in the best interests of Alphabet and its stockholders." The company has also launched two new incentive programs linked to its emerging technology businesses, which could be worth up to $350 million in additional stock awards.
Stock awards
New incentive programs linked to Waymo and Wing Aviation
Under the new incentive programs, Pichai will get stock linked to the value of Waymo, Alphabet's self-driving taxi unit. This has a target value of $130 million. He will also get $45 million in shares linked to Wing Aviation, the group's drone delivery business. The final value will be determined based on their "fair value" three years from now with potential payouts reaching up to 200% of the target if performance exceeds expectations.
Total potential
Alphabet's strong financial results amid rising profits
The total compensation package means Pichai could earn up to $692 million if all targets are met. The guaranteed baseline amount is estimated at about $391 million, including stock awards and salary. This comes as Alphabet continues to post strong financial results with a 30% year-on-year (YoY) rise in fourth-quarter profit to $34.5 billion or $2.82 per share, and an 18% increase in revenue to $113.8 billion in the fourth quarter.