Google CEO 'Lord Farquaad' lambasted for giant pay raise after 12,000 layoffs

AppleInsider

It's been a tough year for tech, but even as Google laid off 12,000 employees, CEO Sundar Pichai got a substantial pay raise, earning him the nickname "Lord Farquaad."

Google CEO Sundar Pichai and Lord Farquaad

Tech companies have laid off thousands of employees after over-hiring during the pandemic. Google announced layoffs in January, with 12,000 employees cut for cost-cutting.

Large companies have complex financial systems, so it isn't going to be clear how the money saved from laying off those employees will be used. However, it is damning when a $70 billion stock buyback program was announced in one week, then SEC filings show the CEO got a raise in the next.

A report from CNBC shows Google CEO Sundar Pichai was paid $226 million in 2022, making him one of the highest paid CEOs in the United States. This is mostly due to a $218 million stock award that he receives every 3 years.

Pichai's base salary is $2 million, and he gets $6 million in personal security in 2022. That's being contrasted to Apple CEO Tim Cook, which took a 40% pay cut in 2022. Apple is one of the few tech companies that hasn't handed out significant layoffs, too.

The pay Pichai received has led to a disgruntled Google workforce. Memes are being shared through internal chat channels, some comparing the CEO to the fictional Lord Farquaad from "Shrek."

One meme reads, "Sundar accepting $226 million while laying off 12k Googlers, cutting perks, and destroying morale and culture." A quote from Lord Farquaad in the meme says, "some of you may die, but that is a sacrifice I am willing to make."

When Google announced the 12,000 employee layoffs, Pichai shared his distress at the situation in a statement.

"This will mean saying goodbye to some incredibly talented people we worked hard to hire and have loved working with. I'm deeply sorry for that," Google CEO Sundar Pichai wrote in a blog post. "The fact that these changes will impact the lives of Googlers weighs heavily on me, and I take full responsibility for the decisions that led us here."

Apple announces its Q2 earnings on Thursday, which may reflect the ongoing economic issues plaguing all of Silicon Valley. However, the sting of those earnings will be somewhat alleviated due to the lack of significant layoffs -- which is more than Google and Pichai can say today.

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mark fearing

Good ol' greed. Taking what you get - and maybe even think you deserve. Because you know, I'm SURE he worked extra hard for that $200 million. But using capitalist theory against themselves - wouldn't he have worked harder if you'd only paid him say, $30,000 last year? Then if he worked even harder he could get a raise.

zoetmb

Absolutely ridiculous.  Would a CEO who was offered say $50m not take the job if it was $25m?   How much wealth does any one person need?  No one should make $250m even if it is stock.  No one. 

His claiming he feels terrible about layoffs is about as good as politicians who offer “thoughts and prayers” after mass shootings.  

IMO (and I’ve been a senior exec, although not a CEO) is that if a company has to layoff employees, it’s a failure on the part of management.   Even aside from the issue of poor management leading to revenue declines, one should always be able to find something else for those employees to do, like building a new product or service.   

waveparticle

The CEO club has a formula calculating the performance of CEO and a formula of how much to reward. This was written into the contract when CEO was hired. You need to take a close look of the formulas before criticizing a CEO's pay increases. But this is a secret only members of CEO club including board members are able to access it.  In general the most important number is the performance of the stock in the prior year. 

jeanpierredeelle

There's only one word that comes into mind : greed.

mike eggleston

I think the most damning part of the article is right here:

Large companies have complex financial systems, so it isn't going to be clear how the money saved from laying off those employees will be used. However, it is damning when a $70 billion stock buyback program was announced in one week, then SEC filings show the CEO got a raise in the next.

This is the smoking gun right here. A CEO knows that if they do layoffs, stock prices usually rise because the P/E ratio rises; then on top of that, a stock buyback means that Google (read: Sundar) knows that the price per share for that stock will skyrocket because there are fewer shares in the wild. As a result, the number of shares he gets (usually a fixed number of shares, depending on how well their stock is doing) will be worth substantially more.

In summary, I think the SEC should investigate his ass and see if insider trading laws can be applied to him.

foregoneconclusion

mike eggleston said:

I think the most damning part of the article is right here:

Large companies have complex financial systems, so it isn't going to be clear how the money saved from laying off those employees will be used. However, it is damning when a $70 billion stock buyback program was announced in one week, then SEC filings show the CEO got a raise in the next.

This is the smoking gun right here. A CEO knows that if they do layoffs, stock prices usually rise because the P/E ratio rises; then on top of that, a stock buyback means that Google (read: Sundar) knows that the price per share for that stock will skyrocket because there are fewer shares in the wild. As a result, the number of shares he gets (usually a fixed number of shares, depending on how well their stock is doing) will be worth substantially more.

In summary, I think the SEC should investigate his ass and see if insider trading laws can be applied to him.

What you describe is one of the primary reasons corporate executives do stock buybacks: it typically generates a personal windfall per the stock value. Even though it IS scammy, it's not something the SEC would be concerned with. Better approach would be for Congress to make buybacks illegal again like they were prior to 1982.  

edited May 2023

tundraboy

waveparticle said:

The CEO club has a formula calculating the performance of CEO and a formula of how much to reward. This was written into the contract when CEO was hired. You need to take a close look of the formulas before criticizing a CEO's pay increases. But this is a secret only members of CEO club including board members are able to access it.  In general the most important number is the performance of the stock in the prior year. 

Yes, and CEOs themselves are board members of other corporations.  I won't block your eye-popping comp if you don't block mine. Corporate governance, especially CEO compensation committees, is the most corrupt but still legal practice in the corporate age.  Its self-dealing and good-old-boy network all rolled into one.

edited May 2023

williamlondon

Lest you forget who are the masters and who are the slaves...

mikethemartian

mark fearing said:

Good ol' greed. Taking what you get - and maybe even think you deserve. Because you know, I'm SURE he worked extra hard for that $200 million. But using capitalist theory against themselves - wouldn't he have worked harder if you'd only paid him say, $30,000 last year? Then if he worked even harder he could get a raise.

Deserves has nothing to do with it. You get what you can negotiate for.

strangedays

these CEOs talk about “taking full responsibility” for poor performance and layoffs, but really just take massive, massive windfalls. The boardroom class protects itself and governance is a joke. They reward failure at the highest levels. 

edited May 2023

macxpress

Yet Tim took a pay cut...

chadbag

If he actually took responsibility he would resign. He is a failure.   His leadership lead to huge layoffs of talented individuals with tons of experience and institutional knowledge that is being lost as well as the lost opportunities Google has let slip away by not moving these people to work on them. 

And Google is paying a lot to get rid of the people and then will pay to hire new people in a year.   These big tech companies have the bank accounts to ride through tough times and come out of them flourishing but instead they are beholden to hedge funds, day traders, and other disinterested parties who want to extract value from a company now instead of increasing company value for tomorrow by growth and new successes.   

Hedge funds, day traders, and other short term holders of the stocks have no real interest in the success of the company.  Unlike real long term owners of the company who want a growing successful company in the future.  But Pichai (and other tech CEOs) are more afraid of the short term holders and appease them through measures that only have short term positive effects on stock notice but that do not lead to long term growth.  

Pichai is a failure and should resign.  

edited May 2023

davidw

mike eggleston said:

I think the most damning part of the article is right here:

Large companies have complex financial systems, so it isn't going to be clear how the money saved from laying off those employees will be used. However, it is damning when a $70 billion stock buyback program was announced in one week, then SEC filings show the CEO got a raise in the next.

This is the smoking gun right here. A CEO knows that if they do layoffs, stock prices usually rise because the P/E ratio rises; then on top of that, a stock buyback means that Google (read: Sundar) knows that the price per share for that stock will skyrocket because there are fewer shares in the wild. As a result, the number of shares he gets (usually a fixed number of shares, depending on how well their stock is doing) will be worth substantially more.

In summary, I think the SEC should investigate his ass and see if insider trading laws can be applied to him.

NO, insider trading laws do not apply here. Not even close. Insider trading involves either buying or selling shares based on information that is not available to the public.

First, here the CEO did not buy any of his shares, they were awarded to him as part of his pay package. And most likely these RSU were awarded to him at least a year ago and maybe 2 or 3 years ago, depending on his contract. Way before any buybacks and layoffs were announced.

Second, this CEO can not sell any of his RSU until its vested. Once these RSU became vested, the public already knows about the buyback program and the layoffs. So no trades were made with these shares using info that was not available to the public.

That said, even with shares that a CEO have, there are company rules that restrict when they can buy more shares or sell their shares. Rules like they must set a date to buy or sell shares weeks ahead of time. They can not make any trades weeks before earnings or any other announcements that might have a big affect on share price. And with the SEC rules, even family, close relatives or friends of company's executives that might have access to trading info not available to the public, are bound by the same restrictions as the executive.

davidw

zoetmb said:

Absolutely ridiculous.  Would a CEO who was offered say $50m not take the job if it was $25m?   How much wealth does any one person need?  No one should make $250m even if it is stock.  No one. 

His claiming he feels terrible about layoffs is about as good as politicians who offer “thoughts and prayers” after mass shootings.  

IMO (and I’ve been a senior exec, although not a CEO) is that if a company has to layoff employees, it’s a failure on the part of management.   Even aside from the issue of poor management leading to revenue declines, one should always be able to find something else for those employees to do, like building a new product or service.   

That depends on whether if some other company looking for a CEO, was willing to offer $50M ...... don't you think? Not every CEO is like a Steve Jobs. Jobs would never have left Apple even if he was offered $500M, cash. But even Jobs was concerned about the amount of stocks awarded to him. To Jobs, it shows the board appreciation and recognition for the job he was doing running Apple as interim CEO, even if the dollar amount meant nothing to him. 

https://techcrunch.com/2009/04/25/steve-jobs-on-the-value-of-stock-options/?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS91cmw_c2E9dCZyY3Q9aiZxPSZlc3JjPXMmc291cmNlPXdlYiZjZD0mdmVkPTJhaFVLRXdpM3MtamlqOTMtQWhWWUJVUUlIZU1LQU5jUUZub0VDQWdRQVEmdXJsPWh0dHBzJTNBJTJGJTJGdGVjaGNydW5jaC5jb20lMkYyMDA5JTJGMDQlMkYyNSUyRnN0ZXZlLWpvYnMtb24tdGhlLXZhbHVlLW9mLXN0b2NrLW9wdGlvbnMlMkYmdXNnPUFPdlZhdzBlVTgtRGhzenFvRXJ4S09aclBSOEs&guce_referrer_sig=AQAAAG4Tg9ObcKGfdf8QHd-cKOMcexTjBohn19UAHo0yQxLqoPCZT7M-HYZSqd_OvCw4s4X81e5b7r0l3Kx3VO2RZJCRfCl_r1toy8BqmIolrQgZxkE4x-UgKeRiYslU15zeEoWdbARbYflnB9lBnAnqe6KAIBmaFsbkd9KwgJumGobP

kimberly

StrangeDays said:

these CEOs talk about “taking full responsibility” for poor performance and layoffs, but really just take massive, massive windfalls. The boardroom class protects itself and governance is a joke. They reward failure at the highest levels. 

I agree with this. Get on a board, clean up and, at the slightest hint of failure / scandal, resign and piss off.

entropys

Median salary $300k! Clearly the average is much higher because of the executives’ salaries, but half earn more than $300k? How much to the cleaners and reception staff get?

sflagel

The good ole' "I take full responsibility .... but none of the consequences".

sflagel

You know how the capital structure has a hierarchy, bond holders get paid first, equity holders last? We should have the same for staff sackings: the highest paid get laid off first, the lowest paid workers last. 

gadgetcanadav2

They could have done a $68B stock buyback program instead of $70B and still paid those 12,000 people $100K each this year.

edited May 2023

dewme

Why is anyone surprised to see capitalism in action? When you peel back the ideology and chest-thumping comparisons to other economic system alternatives, remove the sugar coating, and disregard the have-nots and losers ... this is kind of what happens at the raw execution level with capitalism. Fairness? Social considerations? Humanity? Bah humbug. There is no crying in baseball, nor is there any in business.

Honestly, I say this with a grain of salt because most decent companies do factor in fairness, social concerns, and humanity into their business execution, at least to some degree. The hope is that the boards and shareholders share the same priorities and are comfortable with the actions they take or implicitly approve of when it comes to employees. But their #1 priority, and the one instilled in their leaders and CEO is maintaining the viability and profitability of the business. This is never the same as employee's #1 priority, which is maintaining their career and the financial safety and security of themselves and their families. In most cases there is a reasonable balance and symbiosis between these two concerns, but when push comes to shove, capitalism steps in, and we all know whose priority will determine the outcome, which in Google's case is Lord Farquaad. It's good to be king.

edited May 2023