Please answer the following question: "Will Google's pay strategy work "forever"? Consider the evolution of Microsoft's pay strategy as its growth slackedned. Should Google prepare for a similar future? If so, When and what sort of actions should they take to prepare?"

in Chapter 2, we talked about how. Microsoft had changed its pay strategy to rely less on stock product cycle phase changed from growth to maintenance and its stock price growth slowed. Google went public in 1994 and its stock price, already at around $100/share at that point, then rose rapidly (a great big understatement), peaking at around $370* in November 2007. How- ever, 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 subjected to comments such as "Google isn't the hot place to work" and has become the safe place to work" (per Robert Greene, who recruits engineers for start-ups such as Facebook).46 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.47 The cost of the salary increase was estimated by Barclay's to be $400 million "Google's stock split in 2014. Thus, the pre-2014 stock price values mentioned here have been adjusted by multiplying them by .50. "Analysts say Google is facing what all Silicon Valley companies struggle with when they gradu- much as $20,000 more than it was paying a few months ago" and that salary is so far above the crease, one report says that Google was "paying computer science majors just out of college as ate from start-up status and into the realm of Big Tech."49 With or without the 10 percent in industry average that start-ups cannot match Google's salaries "50 (Actually, one many non-start-ups are likely to match such salaries.) It is also noteworthy that Google repriced 7.64 million stock options in 2009. Of 20,200 total had an average exercise price of $522, with new options having an exercise price of $308.57. By employees, 15,642 took advantage of the opportunity to replace their existing options, which one estimate, Google was on a path to spend $2 billion on stock-related compensation in 2011.2 might ask how Subsequently , Ganglersted and are rek option in the stricted stock units for employees . The laza ter are actual grants of stock and are restricted in the sense that employees need to remain with As of early 2015, Google's stock price was around $560, so employee stock-related wealth has soared. That goes along with their high salaries (see above and also the beginning of Part Three of your text) and their well-known extensive benefits. (Recall from Chapter 2 that they regularly top Fortune's list of Best Companies to Work For.) CTION