In Chapter 2 we talked about how Microsoft had changed its pav strategy to relv less on stock options, more on

stock arants. and then to relv less on stock grants and more on cash as its product cvcle phase chanaed from growth tc maintenance and its stock price growth slowed (at least back then it had). Google went public in 1994 and its stock price, already at around stoo/share at that point, then rose rapidly a great big understatement), peaking at around $37048 in November 2007. However. as of May 2012. Google's stock price was right around $300 (with a 52-week high of about $335). As a result. Google was subiected to comments such as "Google isn't the hot place to work and has "become the safe place to work" (ver someone recruiting engineers for then start-ups such as Facebook) 49

Perhaps following in the footsteps of Microsoft, Google announced that it was giving a 10 percent across the board increase in salary. Not stock options. Not stock grants (but, see below). Salary. 50 The cost of the salary increase was estimated by Barclav's to be $400 million 51

"Analvsts sav Google is facing what all Silicon Valley companies struggle with when they graduate from start-up status

and into the realm of Big Tech"S< With or without the 10 percent increase, one report says that Google was "paying computer science majors just out of college as much as $20,000 more than it was paying a few months ago" and that salary "is so far above the industry average that start-ups cannot match Google's salaries." 53 (Actually, one might ask how manv non-start-ups are ikelv to match such salaries.)

It is also noteworthy that Google repriced 7.64 million stock options in 2009. Of 20.200 total emplovees. 15.642 took advantage of the opportunitv to replace their existing options. which had an average exercise price of $522. with new options having an exercise price of $308 57 54 B one estimate. Google was on a path to spend $2 billion on stock-related compensation in 2011. 55 Subsequently. Google moved from stock options to restricted stock units for employees. The latter are actual grants of stock and are restricted in the sense that employees need to remain with Google for a minimum amount of time

As of earl 2015. Good e's stock price was around $560 and during mid-2021 now as Alphabet. the stock price was

much higher still over $2 .200! Thus. emplovee stock-related wealth has soared. That goes along with their high salaries (see above) and their well-known extensive benefits. (Recall from & Chapter 2 that they have regularly topped Fortune's list and Forbes' list of top emplovers. We will talk more about emplovee stock plans and benefits in Part Three of your text. In retrospect, it looks like it may have been premature to conclude that Google had transitioned from a growth companv to a maintenance mature companv. Much as what happed with Microsoft.)

Questions:

What is Google's pay level? How do you define and measure its pay level? How well is it captured by salary alone?

Do you get the sense that companies act on the best information they have at the time, but that in retrospect, they are not so good at predicting the future?

Will Google's pay strategy work "forever"? What changes might be needed going forward?