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Google CFO Hire Makes a Big Splash in Executive Compensation

April 2, 2015

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Executive compensation has made the news recently with Google offering a $70 million pay package to incoming CFO Ruth Porat. Beyond the eye-catching headline, several interesting kernels are buried inside the deal.

Google granted Ms. Porat $30 million in one-off new hire awards, consisting of a $5 million cash bonus and $25 million worth of restricted stock units. Another significant component of her compensation is a $40 million biannual grant of restricted stock units. Ms. Porat will also receive a base salary of $650,000.

When we consider that the $40 million grant is meant to cover two years of compensation, Ms. Porat is scheduled to earn an equivalent annual compensation of approximately $20.7 million. That’s a 44% pay bump over the $14.4 million she received last year as CFO of Morgan Stanley.*

Some Context for the Google CFO Hire

A recent trend among large technology firms is to seek executives from outside the company. To provide context for Google’s move, we can look to Salesforce and Symantec, two Silicon Valley firms that have recently looked externally for new CFOs. In August 2014, Salesforce hired Mark Hawkins, former CFO of the S&P 500 software company Autodesk. This move followed Symantec’s March 2014 hire of Thomas Seifert, pulling him away from his CFO position at Brightstar. Mr. Hawkins and Mr. Seifert received pay packages of approximately $9.6 million and $6.8 million, respectively.

Google’s larger payout is unsurprising, but one notable difference from the Salesforce and Symantec comparisons is the size of Ms. Porat’s sign-on grants compared to her annual compensation. While Ms. Porat was granted new hire awards in excess of her yearly earnings, Mr. Hawkins and Mr. Seifert received one-off cash grants of $500,000 and $1.8 million, representing approximately 5% and 36% of annual compensation, respectively.

Another item of note is that Ms. Porat’s compensation package is entirely guaranteed except for service requirements. This contrasts with the packages that Salesforce and Symantec offered their new CFOs, where the majority of the compensation is at-risk.

Google has made waves by expanding its reach deep into the heart of Wall Street. It should come as no surprise that this big move is just as interesting on the compensation front.