What is the purpose of these equity awards?

The equity awards are designed to incentivize and retain key executive officers by linking a significant portion of their compensation to Alphabet's long-term performance (TSR for PSUs) and continued employment (GSUs). This aligns executive interests with those of shareholders.

How is the value of the PSUs determined if performance is above or below target?

The number of shares underlying the PSUs will be calculated based on the target value. However, the actual number of shares that will vest can range from 0% to 200% of the target amount, depending on Alphabet's Total Shareholder Return (TSR) performance relative to the S&P 100 companies over the 2023-2025 performance period.

When will the GSUs vest?

The General Stock Units (GSUs) will begin vesting on June 25, 2023, with one-sixth vesting on that date. An additional one-twelfth of the grant will vest quarterly thereafter, until the entire grant is vested, provided the executive remains employed with Alphabet.

What happens to the equity awards if an executive leaves the company?

For PSUs, upon termination by Alphabet without cause, unvested PSUs will be prorated based on service during the performance period, with the remainder forfeited. If termination is due to death, unvested PSUs vest immediately at target performance (or actual performance if the period is complete). For GSUs, all unvested units vest immediately upon termination due to death. Other termination scenarios are subject to the terms of the stock plan.

Alphabet Inc. 8-K: Leadership Changes

Summary

Alphabet Inc. (GOOGL) filed an 8-K on April 20, 2023, disclosing significant equity awards approved by the Leadership Development, Inclusion and Compensation Committee (LDICC) on April 18, 2023, for four key executive officers. These awards, expected to be granted on May 3, 2023, consist of both Performance Stock Units (PSUs) and General Stock Units (GSUs), aligning executive compensation with company performance and retention. The substantial PSU grants are tied to Alphabet's Total Shareholder Return (TSR) relative to the S&P 100 over a 2023-2025 performance period, with vesting ranging from 0% to 200% of target based on performance. The GSU grants have a more immediate, phased vesting schedule over the next year, contingent on continued employment. These awards underscore the company's strategy to incentivize senior leadership through equity linked to both stock performance and long-term value creation.

Key Highlights

1Alphabet approved substantial equity awards for four senior executive officers: Ruth Porat (CFO), Prabhakar Raghavan, Philipp Schindler, and Kent Walker.
2The awards include Performance Stock Units (PSUs) with a target value of $5 million for Ms. Porat and Mr. Walker, and $12 million for Mr. Raghavan and Mr. Schindler.
3Additionally, General Stock Units (GSUs) were awarded, totaling $18 million for Ms. Porat and Mr. Walker, and $23 million for Mr. Raghavan and Mr. Schindler.
4PSUs are performance-based and vest based on Alphabet's Total Shareholder Return (TSR) relative to the S&P 100 over a 2023-2025 performance period, with vesting potentially ranging from 0% to 200% of the target value.
5GSUs will vest in installments starting June 25, 2023, and quarterly thereafter, subject to continued employment, indicating a retention incentive.
6The number of shares granted for both PSUs and GSUs will be determined by dividing the award value by the average closing price of Alphabet's Class C capital stock during April 2023.
7Specific provisions for vesting acceleration upon death and prorated vesting upon termination without cause are outlined for PSUs.

Alphabet Inc. 8-K Report, Executive Changes (Apr 21, 2023)

Summary

Key Highlights

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