8-KLeadership Changes

Alphabet Inc. 8-K Report, Executive Changes (Dec 21, 2022)

Filed December 21, 2022For Securities:GOOGLGOOGGOOGMGOOGN

Summary

Alphabet Inc. filed an 8-K on December 20, 2022, to disclose a new equity award granted to CEO Sundar Pichai by the Leadership Development, Inclusion and Compensation Committee. This triennial award, last granted in December 2019, comprises both performance-based and time-based equity components, with a significant portion contingent on Alphabet's relative Total Shareholder Return (TSR) compared to S&P 100 companies. The company has adjusted the award structure to further align Mr. Pichai's compensation with long-term shareholder value creation and stock performance. The new award includes two tranches of Performance Stock Units (PSUs) with a target value of $63 million each, covering performance periods of 2023-2024 and 2023-2025, respectively. The proportion of PSUs in the award has been increased to 60% (from 43% in 2019), and the performance hurdle for on-target PSU payout has been raised to the 55th percentile of TSR (from 50th percentile). Additionally, Mr. Pichai received $84 million in the form of Alphabet Restricted Stock Units (GSUs), which will vest over three years. The Committee noted Mr. Pichai's strong performance as CEO and maintained the on-target value of the award unchanged from 2019.

Key Highlights

  • 1Alphabet CEO Sundar Pichai received a new triennial equity award valued at $189 million (target value).
  • 2The award is split between Performance Stock Units (PSUs) and Restricted Stock Units (GSUs).
  • 360% of the award is in PSUs (increased from 43% previously), with vesting tied to Alphabet's Total Shareholder Return (TSR) relative to S&P 100 companies.
  • 4The performance requirement for on-target PSU payout has been increased to the 55th percentile of TSR, up from the 50th percentile.
  • 5The PSUs have two performance periods: 2023-2024 and 2023-2025, with payout ranging from 0% to 200% of target based on TSR performance.
  • 6The GSUs, totaling $84 million, will vest over three years on a quarterly basis.
  • 7The on-target value of the CEO's award remains unchanged from the 2019 grant, acknowledging strong performance.

Frequently Asked Questions

The total target value of Sundar Pichai's new equity award is $189 million, comprising $126 million in Performance Stock Units (PSUs) and $84 million in Restricted Stock Units (GSUs).

The company increased the proportion of performance-based equity (PSUs) to 60% of the award and raised the performance threshold for these PSUs. Vesting is now tied to Alphabet's Total Shareholder Return (TSR) relative to the S&P 100, with an on-target payout requiring the 55th percentile of TSR performance.

The PSUs are performance-based and will vest over two periods: 2023-2024 and 2023-2025, with vesting contingent on Alphabet's TSR performance and continued employment. The GSUs will vest over three years, with 1/12th vesting quarterly starting March 25, 2023, subject to continued employment.

No, the on-target value of the award remains unchanged from the 2019 grant. However, the design has been modified to place a greater emphasis on performance-based vesting.