TLDR
- Alphabet has approved a new pay package for CEO Sundar Pichai, which could amount to up to $692 million over three years
- The base salary remains at $2 million per year — the majority is in stock awards linked to performance
- Performance stock units have a target of $126 million, and this can increase to $252 million if Alphabet outperforms its peers in the S&P 100
- Pichai could earn up to $130 million from Waymo and $45 million from Wing if those units meet their targets
- Following the SEC filing, GOOGL closed 0.78% lower on Friday at $298.52
Alphabet’s board has just bestowed upon Sundar Pichai one of the most lucrative pay deals in corporate history. The package, submitted to the SEC on Friday, could disburse up to $692 million over the subsequent three years. The majority of this is contingent upon the performance of the company and its subsidiaries.
His base salary stays at $2 million per year — a trifle in comparison to the stock-related amounts at stake.
The crux of the deal is a performance stock unit grant with a target value of $126 million. Should Alphabet’s total shareholder return surpass that of other major S&P 100 companies, this figure could double to $252 million. If performance is lacking, no payout is made.
In addition, Pichai receives $84 million in restricted stock that vests monthly over three years, provided he remains with the company. There’s no performance condition for this portion — only service duration.
GOOGL dropped 0.78% on Friday, closing at $298.52, on the day the filing was made.
Waymo and Wing Tied Directly to Pichai’s Pay
The most eye-catching parts of the package are the awards tied to Alphabet’s newer bets.
Waymo, the autonomous vehicle unit, has a target payout of $130 million. If the business performs robustly, that figure could reach $260 million. This is a direct financial incentive for Pichai to achieve results in the self-driving division.
Wing, the drone delivery arm, has a smaller yet still notable target of $45 million — with a cap of $90 million if the unit meets its growth benchmarks.
Alphabet’s board recognized that both units face genuine technical obstacles, but stated that they have made substantial progress. The company characterized Waymo and Wing as “confronting enormous challenges in autonomous driving and delivery.”
If Pichai is terminated, he forgoes all unvested stock options.
A Decade of Market Growth Behind the Deal
The timing of this package underscores the significant ground Alphabet has gained under Pichai’s tenure. When he assumed the CEO position in 2015, the company was valued at approximately $535 billion. It now stands at roughly $3.6 trillion, briefly surpassing $4 trillion in January.
The board presented the new package as a means to keep him focused on key growth areas, noting that “further incentivizing Mr. Pichai is in the best interest of Alphabet and its stockholders.”
Pichai and his wife currently hold approximately 1.67 million Alphabet shares, valued at nearly $498 million at the recent price of around $298.
Wall Street continues to be bullish on GOOGL. The stock has a Strong Buy consensus from 32 analysts, with an average price target of $376.57 — suggesting approximately 26% upside from current levels.
