Option exchange salvaged Google employees’ underwater options.
Google CEO Eric Schmidt didn’t receive a bonus or any new stock or option awards in 2008. Nor did Larry Page or Sergey Brin, who each took a $1 salary and nothing more.
Eric Schmidt, chairman and CEO of Google, was paid a $1 salary in 2008. He also received $508,763 in other compensation — which consisted of $402,562 for personal security and $106,201 for personal use of company-chartered aircraft.
Slideshow: CEO payday: See how much tech CEOs were paid in 2008
But Schmidt didn’t receive a bonus or any new stock or option awards in Google’s 2008 fiscal year, which ended Dec. 31. Nor did Larry Page or Sergey Brin, who each took a $1 salary and nothing more, according to documents filed with the U.S. Securities and Exchange Commission.
None of the Google triumvirate holds any outstanding options — but each owns quite a bit of stock in the company. Schmidt owns roughly 9.4 million shares, or 12.5%. Page owns 29.1 million shares (38.9%), and Brin owns 28.6 million shares (38.2%).
“Eric, Larry and Sergey have voluntarily elected to receive only nominal cash compensation. Their primary compensation continues to come from returns on their ownership stakes in Google,” the company stated in its proxy statement, filed March 24 with the SEC. “As significant stockholders, their personal wealth is tied directly to sustained stock price appreciation and performance, which provides direct alignment with stockholder interests.”
As a company, Google reported strong revenue growth but relatively flat profit for 2008. It reported revenue of $21.8 billion, a gain of 31% over the $16.6 billion reported in 2007. Net income grew 0.5% to $4.23 billion, up from $4.2 billion in 2007.
Google’s profits took a big hit in the fourth quarter, when the company recognized $1.09 billion in write-offs related primarily to its investments in AOL and Clearwire.
Google’s stock price, too, has taken a hit. It opened 2008 at $692.87 on Jan.2 and closed the year at $307.65 on Dec. 31. Today it’s trading in the $343 range.
To address the number of outstanding stock options that are underwater (meaning the stock options have exercise prices that are higher than the current market price of Google’s stock), Google offered its employees a voluntary, one-for-one stock option exchange. The exchange offer — completed earlier this month — allowed Google employees to swap their underwater options for an equal number of replacement options with an exercise price of $308.57 per share (the closing price of Google’s stock on March 6).
The goal of the program was “to create more incentives for employees to remain at Google and contribute to achieving its business objectives,” the company said in a January announcement of the exchange program.
Google employed 20,222 full-time employees as of Dec. 31.
Schmidt, Page and Brin’s total pay is calculated using data supplied in a proxy statement filed with the SEC. The following figures are taken from the summary compensation table: salary, bonus, non-equity incentive plan compensation and all other compensation (perks). Added to those figures is the estimated value of stock options and awards granted during the year; that figure is taken from the table that summarizes grants of plan-based awards. The calculations don’t include changes in the values of retention plan and pension benefits.
