Alphabet Approves $692 Million Pay Package for CEO Sundar Pichai with Waymo Growth Incentives

Alphabet GOOGL -0.78% ▼ has set a new pay plan for Chief Executive Sundar Pichai that could reach $692 million over the next three years if the firm meets a set of stock and business goals.

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Most of the plan is tied to stock awards that depend on how the company performs for investors. In short, the package pays more if Alphabet’s stock beats other large firms in the S&P 100 OEF -1.09% ▼ .

The board said the plan is meant to reward strong results and keep the chief focused on key growth areas. In its filing, Alphabet said that “further incentivizing Mr. Pichai is in the best interests of Alphabet and its stockholders.”

First, the core part of the package comes from performance stock units with a target value of $126 million. These shares will pay out based on Alphabet’s total shareholder return compared with other large firms. If the company performs very well, the value could reach $252 million. If results lag, the payout could fall to zero.

Next, Pichai will receive $84 million in restricted stock over the same three-year period. These shares vest monthly as long as he remains with the company. In addition, his base salary will remain $2 million per year.

Meanwhile, GOOGL shares dropped 0.78% on Friday, closing at $298.52.

Incentives Linked to Waymo and Wing

In addition to stock tied to overall performance, Alphabet added two special incentives linked to its newer tech projects.

The company created a stock plan tied to Waymo, its self-driving car unit. Pichai can receive shares with a target value of $130 million tied to Waymo’s future value. If the unit performs well, the payout could reach $260 million.

Alphabet also added an award tied to Wing, its drone delivery arm. This grant has a target value of $45 million and could reach $90 million if the business grows as planned.

Alphabet’s board noted that both projects face large tech challenges but have made strong progress. The company said Waymo and Wing are “tackling enormous challenges in autonomous driving and delivery.”

A Decade of Market Value Growth

The pay plan also reflects Alphabet’s growth during Pichai’s tenure as chief. Since he became CEO in 2015, the company’s market value has climbed from about $535 billion to roughly $3.6 trillion. At one point in January, the value briefly moved above $4 trillion.

Pichai joined Google in 2004 and helped lead the Chrome browser and the Android mobile system. Later, he oversaw the company’s move into AI tools that now run across search and other products.

At the same time, he has guided the firm through major legal cases in the U.S. involving search and app store rules. One more case tied to online ads is still pending.

Meanwhile, filings show that Pichai and his wife own about 1.67 million Alphabet shares worth close to $498 million based on a recent price of about $298 per share.

Overall, the new plan shows that Alphabet wants its chief’s pay tied closely to stock gains and the long-term value of projects like Waymo and Wing.

Is Google Stock a Buy, Hold, or Sell?

On the Street, Alphabet has a Strong Buy consensus view, based on 32 analysts’ ratings. The average GOOGL stock price target stands at $376.57, implying a 26.15% upside from the current price.

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