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.