Google Makes Massive Counteroffers To Retain Employees

http://techcrunch.com/2011/04/06/google-said-to-have-high-level-mole-at-twitter-makes-massive-counteroffers-to-retain-employees/

by bigstorm • 15 years ago

95 64 15 years ago

techcrunch.com

olivercameron• 15 years ago

$3.5 million for a key employee I can deal with, but $100 million? It feels like absolute lunacy, if true.

sage_joch2• 15 years ago

If it turns out to be true, I will probably sell my Google stock. I'd always felt that it was a pretty safe holding, but any company that could piss away money like that is not one I want to hold.

jacques_chester2• 15 years ago

More to the point, it's not your dividend they're taking, it's a direct dilution of the value of your shareholding. A small tax levied on all other shareholders.

tonystubblebine2• 15 years ago

If that's what we're worth in economic terms then that's what we should be paid. I'm all for rumors like this because I want to be paid for value. Should Lebron James work for free because he's playing a friggin' game for a living or should he be getting hundreds of millions of dollars because that's just a fraction of the revenue he generates?

hyperbovine2• 15 years ago

The analogy is flawed. I'm not a basketball fan, but it sounds like James is the best living basketball player. No one else can do his job. You're claiming the same is true of a couple of mid-level product managers at Google? I don't buy it.

bbatsell• 15 years ago

$50m in outright stock grants vested in only two years for a product VP?

Not really passing the sniff test for me.

ChuckMcM• 15 years ago

This isn't an April Fools post is it? I mean seriously, if you're willing to pay $50M or $100M to keep a single employee from walking, what happens if they die on their commute into work? What sort of risk are you carrying anyway?

And I didn't think I could be amazed by 'Google scale' any more, sure proves I was wrong on that.

davej3• 15 years ago

I agree that it's an outrageous amount of money, but it's not just a case of losing talent, it's also about losing trade secrets to a competitor.

The $50M/$100M still sounds a bit out of whack.

ciupicri• 15 years ago

> losing trade secrets to a competitor

Wouldn't this be illegal?

bigstorm2• 15 years ago

When I see this kind of money being offered, FB valuated at $75B, Groupon at $25B etc etc..I remember the 2000 IT Bubble. A lot of similar things happened then and it was scary

ig12• 15 years ago

I'm wondering if they failed to check the date on the email of their tip-off.

Extraordinary claims require extraordinary evidence.

I might be mistaken but I believe Sundar Pichai isn't an american national, in which case he'll be working on a visa. And in the US work visas require a public declaration of salary (the published data has the names stripped but frankly at a $50m salary I imagine he'd be easy to spot). So come paperwork renewal time we'll be able to see exactly how accurate TC are...

bdclimber14• 15 years ago

I like where you're going, but it mentioned it was $50MM in stock, not salary.

alphakappa• 15 years ago

Just because someone is not an American national doesn't mean that they are on a work visa. If you google his profile, you'll see that he's been working in the US for a long time (long enough for him to have a green card by now)

mayukh2• 15 years ago

He seems to have been here (in the US) long enough to be either a permanent resident or naturalized Citizen. So that wouldn't apply, unless someone knows otherwise for sure.

Wrt Visa rules, I know you have to disclose salary information to the INS when applying for a work permit, don't think that's publicly available though.

wmf• 15 years ago

If they die they don't go to work for Twitter.

dotBen3• 15 years ago

what happens if they die on their commute into work?

Then their estate would inherit whatever %age of the vesting period that they agreed.

So if they had agreed, as was written on TC, $50m over two years and they died after 6 months then the estate would receive $12.5m unless there was a cliff agreed.

dotBen3• 15 years ago

The above is a factually correct - are the downvotes because I gave a literal answer or because I'm not jumping on the "oh I'm outraged at these amounts" bandwagon?

If Google wants to golden-handcuff an employee with a $50 deal that's their prerogative. If you don't like it, sell your GOOG stock. If you don't have GOOG stock then why are you so worked up about it?

aChrisSmith• 15 years ago

Since when did TechCrunch become a tabloid?

davej3• 15 years ago

About 2007/2008 by my recollection.

minimax2• 15 years ago

http://news.ycombinator.com/item?id=181821

The subject of TC posts on HN has been a contentious issue for as long as HN has existed. I think there is still a pretty large contingent that thinks TechCrunch should have been banned just the same way Valleywag was.

benologist• 15 years ago

When they realized it sold more ads + took less time to write the pieces. Then AOL bought them and it became official!

bigstorm2• 15 years ago

well said!

zheng• 15 years ago

When it began to read more like TMZ and less like Ars.

natrius• 15 years ago

Call it what you want, but not only is this article is very interesting if it's true, it's also very useful to know for anyone in the industry.

brown9-2• 15 years ago

The chances that the players in this game are using careful leaks to TechCrunch, either with real or fake information, in order to make moves against the other players is very high. As readers we shouldn't really trust that what Twitter sources tell TechCrunch is totally legit, or the same for what Google sources are telling TechCrunch - playing TC or other members of the press in order to help tilt the direction of discussion one way or the other seems like a pretty obvious move.

For example, Google Competitor X sending TechCrunch fake information about Google's desperate-sounding counter-offers helps reinforce the perception of their desperateness.

Also, these two sentences don't really add up:

Google may have paid as much as $150 million in stock grants to retain key product employees Sundar Pichai and Neal Mohan, say multiple sources. Both were offered the chief product role at Twitter

Regardless, the fact that large fortunes are being handed out to mid level technical managers is somewhat of a red flag in general.

jonmc12• 15 years ago

Just call it a pre-emptive talent acquisition. Since both Twitter and Google know that these product guys could go start their own venture, raise $20M, and then sell the team to the highest bidder, they are just preempting the process. Gotta think ahead to overpay talent before your competitor can.

nethsix• 15 years ago

Usually I go straight to HN comments to read the first few ones to determine if a posted article is worth reading. You guys/gals rock because you help me avoid tabloid stuff and save precious minutes of my life.

brndnhy• 15 years ago

I didn't think I was the only one.

There aren't too many, or any, other places where you get a peer level of trust from an otherwise anonymous community.

latch• 15 years ago

"If you're a Google employee and you aren't out interviewing at Facebook, Twitter or Zynga you are a moron"

This is why this has to be false. The precedent would be destructive. How many employees will go out looking for a job to use as leverage, not get a google counter offer, and just leave?

tzs2• 15 years ago

Or it could be clever. Google is at a stage in their corporate life where they need people who aren't primarily chasing money. Maybe this is a plan to get those people to leave.

angryjim• 15 years ago

Who are you kidding? We are all chasing money.

jerf• 15 years ago

"Google is at a stage in their corporate life where they need people who aren't primarily chasing money."

I find myself wondering what possible trigger point for that transition you could have in mind that has not already happened.

wallflower• 15 years ago

If all you get from your job is a (big) paycheck, then you are underpaid.

Yet, I know many artists who stretch their creative souls and struggle financially.

I think there is a happy balance but that is not static, needs to be readjusted as life unfolds, from young whippersnapper programmer to family comes first tech lead.

JMiao• 15 years ago

when google poached from microsoft, all ballmer did was throw a chair out the window.

mayukh2• 15 years ago

Linking to public profiles: http://www.linkedin.com/pub/neal-mohan/0/278/520 http://www.linkedin.com/in/sundarpichai

I would expect a statement from Google on this (whether its an April Fool's joke or not). There is no way they can let their other employees think that 2 guys are making bank here. Its just not sustainable to let employees think that this is the way forward to negotiate salaries

jacques_chester2• 15 years ago

I think for share packages that large they'd need to make disclosures to the SEC, wouldn't they?

trotsky• 15 years ago

Multiple sources close to Twitter have said that someone with access to Twitter’s most confidential information, such as who they are interviewing for key executive spots, may be leaking that information directly to Google. In this case, Google may have acted on that information too quickly. And people at Twitter, say these sources, are steaming mad.

I wonder what google services twitter hiring execs and others use. In the "privacy is dead" age you seem to be able to find out an awful lot about an awful lot if you're willing to go out and piece together public data.And in the realm of open source intelligence gathering, it's unlikely there is a bigger king than google.

I wonder if multiple people at twitter can be found googling the googlers in the days or hours before they meet for a hiring discussion. My money would be on yes, and that's only one of many possible sources.When I was on campus in Redmond a few years ago I was pretty impressed by how tailored the google search ads and even some SERPs in terms of trying to poach from MS.

spencerfry• 15 years ago

My friend just left Google NYC to start his own company. He didn't give Google enough to give him an official counter offer -- he had already made up his mind -- but they did say that it would have been significant.

jhuckestein2• 15 years ago

Thanks for not using Techcrunch's title insinuating that there is a high-ranking Google mole within Twitter.

hamedh• 15 years ago

that's probably the only thing techcrunch is good at these days, coming up with these exaggerated titles. these days you can't help but roll your eyes on all the tabloid articles they post.

btilly3• 15 years ago

Let's see how crazy this is or isn't. From http://www.google.com/finance?client=ob&q=NASDAQ:GOOG I see that Google has a market cap of $184.61B. According to http://en.wikipedia.org/wiki/Google Google has $46.24B in equity, and 24,400 employees.

Equity tends to add to market cap 1-1, so Google's market cap from ongoing operations and potential for growth is $138.37B. That works out to about $5,670,000 per employee. Considering that Google's stock price still reflects a market belief that they will have a lot of growth in their future, most of that market value lies in the actual people. The average Googler is worth millions to Google.

I have absolutely no trouble believing that key employees with a lot of talent and institutional knowledge are worth many times the average. The main thing that is shocking if this story is true is that Google has a good enough understanding of who is worth what to the company that they can properly recognize and act on that fact.

sage_joch2• 15 years ago

1. You seem to imply Google's worth comes entirely from its employees. What about its technology, branding, userbase and paying customers?

2. Google's stock has a P/E in the low 20s. That is not a price that indicates an expectation of a ton of growth.

staunch2• 15 years ago

^ Google employee.

brg• 15 years ago

And staunchest defender since his first day as an SRE.

And since I'm here, btilly you have one of the best AB testing decks out there, and I thank you for that.

btilly3• 15 years ago

Actually not a Google employee any more. I left some months ago.

grellas2• 15 years ago

This sounds dubious to me. It is not only unethical for a senior Twitter employee to be leaking such information but it is plainly illegal. An employee owes a fiduciary duty to his employer to perform his duties strictly for the benefit of that employer. Such an employee also has obligations not to disclose or misuse any trade secret information belonging to that employer. Both of these are pretty serious legal obligations, the violation of which would subject not only the direct malefactor to major liabilities but also anyone conspiring with him to commit the wrongs.

This story, then, assumes that Google is effectively engaged in knowing illegal acts of the most serious kind. While that in theory might be true, it assumes that (1) Google has a company ethic that would tolerate such willful misconduct, and (2) Google would be stupid enough to engage in a course of conduct that could pretty readily be exposed, much to its injury in law and in reputation.

This doesn't ring true for me.

In addition, grants of conventional restricted stock are in fact sales of stock to a recipient. That means someone has to pay for them. Assuming the Google stock here is being sold at fair value, that is one hefty price tag for an employee to pay. Of course, a board of directors might authorize payment by a loan to the employee but that loan would need to be full-recourse in order not to create inordinate tax problems for the company. This means that the employee would borrow, in one case, $100 million, and, in the other, $50 million, on terms for which he can be personally sued for failure to pay. And what would the employee get for his $100- or $50-million price tag? Well, in the normal course, stock worth just that. So where is the bargain for the employee? Even with a discounted price, the risk to the employee would be enormous because the deal would effectively be a bet that Google's stock will increase significantly in value before the stock vests and the payment comes due. Again, this doesn't really make sense. CEOs take such bets with restricted stock on occasion when a company is still fairly young (e.g., Meg Whitman with Ebay), but this is unheard of for an engineer employee, even a high-level one.

A deal of this type could be structured with stock options that would not need to be paid for up front and would not result in a tax hit or payment obligation to the employee upon grant. But this piece specifically uses the term "restricted stock." Perhaps this is not really restricted stock proper but some sort of restricted units that mimic stock but really constitute contingent employee bonuses. But the piece is suspect in its confident assertion that "restricted stock" was used.

Finally, there are the public company implications. Whenever a company incurs a material event, it must be publicly reported in fairly short order in SEC filings. A $150 million outlay? That would seem material even for Google.

Then there is the question of board of director responsibility. Directors have fiduciary duties to adhere to in making stock grants. How would the Google board justify these grants? And how could they justify them based on illegal "tips" received from a Twitter employee.

I may be missing some nuances here, as my firm does not often get deeply into fine points of public-company law. On its face, though, this one does not add up when the legal factors of which I know are taken into account.

anonymous246• 15 years ago

I've gotten restricted stock units (orders of magnitude less obviously), and I definitely don't recall them working like a loan etc.

The transaction is that you get N shares over a K-year vesting schedule (cliff + monthly/quarterly vesting etc). The dollar value on shares that TC published is arrived at by multiplying N by today's GOOG stock price.

This is better for the employee than cash because the stock price in one year may be higher than today. For the same reason, it's better for the company to give shares instead of cash, since they can pay out less in today's dollars.

copper• 15 years ago

That's how RSU's work, though. AFAIK. grellas is right that there's a difference between restricted stock and restricted stock units (which in practise have a tiny, fractional price of the actual market value).

nl• 15 years ago

Whenever a company incurs a material event, it must be publicly reported in fairly short order in SEC filings. A $150 million outlay? That would seem material even for Google.

No it's not - employee compensation is an ongoing expense. You don't see Goldman Sachs doing disclosure everytime someone gets a bonus!

Anyway, Google discloses stock grants every quarter.

Stock-Based Compensation (SBC) – In the fourth quarter of 2010, the total charge related to SBC was $396 million, compared to $276 million in the fourth quarter of 2009.

We currently estimate SBC charges for grants to employees prior to January 1, 2011 to be approximately $1.6 billion for 2011. This estimate does not include expenses to be recognized related to employee stock awards that are granted after December 31, 2010 or non-employee stock awards that have been or may be granted.

http://investor.google.com/earnings/2010/Q4_google_earnings....

grellas2• 15 years ago

OK, point well taken. Thanks for the correction.

Google Makes Massive Counteroffers To Retain Employees

Related Stories