Alphabet Inc., the parent of tech giant Google, has approved a new pay structure for its chief executive Sundar Pichai, linking a larger chunk of his salary to the company's performance.
The vesting of a significant portion of the new equity award will depend on Alphabet's total shareholder return relative to S&P 100 companies, the search giant says in an SEC filing, adding that this performance-based equity may not vest at all.
While making more of the award's vesting dependent on Google's performance, the Leadership Development, Inclusion and Compensation Committee of Alphabet said it recognises Pichai's "strong performance" as the CEO.
These changes further align Pichai's compensation to long-term shareholder value creation and Alphabet's stock performance relative to the S&P 100 over the applicable performance periods, it says.
The committee has increased the proportion of performance stock units (PSUs) to 60% from 43% and increased the performance requirement for on-target PSU payout to 55th percentile from 50th percentile of total shareholder return.
It currently follows a triennial grant cycle for CEO equity awards. Pichai's last equity award was granted in December 2019. As with the 2019 award, the current pay consists of both performance-based and time-based equity.
For this triennial award, Pichai was granted two tranches of PSUs, with a target value of $63,000,000 each. The target number of PSUs was calculated by dividing the target value of the total PSU grant by the average closing price of Alphabet’s Class C capital stock during November 2022.
The PSUs will vest, if at all, based on the total shareholder return performance over a 2023-24 performance period for the first tranche and over a 2023-25 performance period for the second tranche, subject to continued employment on each applicable vesting date, the tech giant says.
"Depending upon Alphabet's total shareholder return performance, the number of PSUs that vest in a tranche will range from 0%-200% of target. Each vested PSU will entitle Pichai to receive one share of Alphabet's Class C capital stock," the filing says.
"Upon termination of employment by reason of death, unvested PSUs with respect to a tranche will immediately vest at target (or actual if the performance period ended prior to death). Upon termination of employment by Alphabet without cause, PSUs will vest based on actual performance but will be prorated based on the number of calendar days in the performance period that Pichai performed services and any remaining unvested PSUs will be forfeited," it adds.
The triennial award also included a grant of $84,000,000 in the form of Alphabet restricted stock units.
Meanwhile, the India born CEO of Google on Monday said the country has a leadership role to play given the scale and the technology leadership it will have. "India will also be a big export economy… will benefit from an open and connected internet and I think getting that balance right will be important," he said.
Pichai's India visit comes weeks after the Competition Commission of India (CCI) imposed hefty penalties on Google for allegedly abusing its dominant market position with respect to android mobile devices and its Play Store policies.