Google's execs pocket $1 salaries
Wednesday 25 March 2009
Google Chief Executive Eric Schmidt and co-founders Larry Page and Sergey Brin maintained their traditional salaries of US$1 last year even as the value of their combined stakes in the internet search leader plunged by nearly $26 billion.
The paltry paychecks, disclosed this week in a regulatory filing, come as no surprise because Schmidt, Page and Brin have insisted on their annual salaries remaining at $1 since Google went public in 2004.
The trio also don't get any bonuses or the stock awards that most of Google's other 20,000 employees receive.
That's because Page and Brin, who founded the company in 1998, already are Google's largest stockholders with about 29 million shares apiece.
Page, 36, and Brin, 35, made Schmidt, 53, a major shareholder when they hired him as CEO in 2001.
Schmidt received perquisites valued at $508,763 last year, mostly to cover personal security bills totalling $402,562. Google also paid a total of $106,201 to fly his family and friends on aeroplanes chartered by the Mountain View, California-based company.
Including his perks, Schmidt's 2008 compensation package edged up 6 per cent from 2007 when his package totalled $478,662.
The Associated Press formula is designed to isolate the value the company's board placed on the executive's total compensation package during the last fiscal year.
It includes salary, bonus, performance-related bonuses, perks, above-market returns on deferred compensation and the estimated value of stock options and awards granted during the year. The calculations don't include changes in the present value of pension benefits, and they sometimes differ from the totals companies list in the summary compensation table of proxy statements filed with the Securities and Exchange Commission, which reflect the size of the accounting charge taken for the executive's compensation in the previous fiscal year.
Limiting their salaries to $1 didn't seem like a big sacrifice for Schmidt, Brin and Page until 2008. That's because they became multibillionaires as their holdings in Google soared eight-fold between the time of the company's initial public offering in August 2004 and the end of 2007.
Although all three men remain among the world's wealthiest people, they suffered a major setback last year. Combined, their fortunes plunged by a combined $25.8 billion, or nearly 56 per cent, in 2008, as investors began to fret that Google would be hurt by the faltering economy.
Google held up better than many people feared as its revenue rose 38 per cent to $21.8 billion, but the company's stock price still plummeted from $691.48 at the close of 2007 to $307.65 at the end of last year.
Google shares have rallied along with the overall market recently, closing Thursday at $347.17.
The steep decline in Google's market value prompted the company to recently decrease its employees' cost to exercise a total of 7.64 million stock options. The re-pricing gives the 15,642 who participated in the program a better chance to strike it rich in future years.
Signalling its intent to hand out even more stock options as it expands, Google wants to add another 8.5 million shares to the pool of available awards. The request will be voted on at the company's annual meeting May 7.
Other Silicon Valley billionaires, such as Yahoo co-founder Jerry Yang and Apple co-founder Steve Jobs, also have limited their salaries to $1 while serving as CEO.
But mogul CEOs haven't been as egalitarian. For instance, Oracle Corp. CEO Larry Ellison pocketed a $1 million salary in the company's last fiscal year and received an additional 7 million stock options valued at $71.4 million when they were granted.
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