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November 14, 2010 8:43 pm
Google has increased the projected annual earnings of a group of its top executives by more than 80 per cent in the latest overhaul to its pay practices to prevent a loss of talent to other Silicon Valley companies such as Facebook.
The changes will give some of the company’s top managers a pay increase of more than $1m a year, provided they and the company hit performance targets to trigger bonuses.
They also stand to make millions of dollars more from shares in the company, following a decision to double the frequency with which they receive awards of restricted stock to once a year.
News of the boost to executive remuneration emerged a week after the search company came up with an across-the-board pay rise of 10 per cent for the rest of its staff.
Competition for experienced engineers and product managers has intensified in the Valley, with Facebook in particular on a hiring spree as it seeks to add new features and extend the reach of its online platform.
Google’s decision to use more of its large cash reserves to reward workers will add to the pressure on smaller internet companies, which will find it hard to compete with its financial firepower.
In an e-mail to staff, Eric Schmidt, chief executive, said that Google had taken the temperature among workers and found that they preferred to receive more of their remuneration as part of their regular annual salaries.
The revamp of pay practices also comes in the wake of action by US regulators to bar Silicon Valley companies from striking deals not to poach each other’s staff – a practice that critics say has held down pay levels artificially.
Google, Apple and four other companies signed a consent decree with the Department of Justice in September in which they agreed to drop “no poaching” agreements.
In a regulatory filing late on Friday, Google said that four executive officers – Patrick Pichette, chief financial officer; Nikesh Arora, head of sales and business development; Alan Eustace, head of engineering and research; and Jonathan Rosenberg, head of product management – would each receive a 30 per cent rise in base pay, to $650,000.
Their target bonuses would increase from 1½ to 2½ times base pay, taking their total projected pay to $2.275m each, up from $1.25m.
Google also said it would give them annual stock awards, with Mr Pichette and Mr Aurora this year receiving shares currently valued at $20m, Mr Eustace $10m and Mr Rosenberg $5m, provided they stay for a set period.
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