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Google Execs Happy With $1 Salaries
DarkClown writes "ZDNet is on the one hand reporting that Google execs will keep their $1 salaries again this year, and on the other hand is reporting that the executives cashed in more than $160 million worth of stock last month." From the stock article: "Since the search giant went public in August 2004, Brin has sold about 6.5 million shares at a market value of $1.68 billion. Page has sold about 5.8 million shares at a market value of $1.4 billion, according to calculations from Thomson Financial. Chief Executive Eric Schmidt, who was brought in to run the company before it went public, has sold more than 2.1 million shares, worth more than $502 million." They could be getting a multi-million dollar salary *and* the stock money. Good faith efforts go a long way in my book.
But can we really say it's some amazing piece of good faith that they settled ONLY for 1.4 billion dollars in salary for the year?
Can we honestly say "good faith" is their motive and not income tax?
jeezus, they take out billions in cashed in options and people talk about "good faith" ...
I believe that Capital Gains Tax is higher than Income Tax (at least from personal experience). I'd be willing to believe "Good Faith" based on that.
"Oh my God. This is terrible. This is the end of my Presidency. I'm fucked."; ~ Donald J. Trump
In this case, the Google founders and executives are cashing in on their IPO. It's not really the same as the typical salary to stock option crap that's going around. Let's face it, if you could get paid via capital gains (15% tax rate, until it's not taxed at all...) instead of salary (38% tax rate), why would you want a salary?
Make dividends and true stock investments (investing in IPOs, new stock offerings, and startup stock payments) taxable at the capital gains rate and revert all the daytrading/recycled stock profits to the full tax rate; it will benefit new technologies and put the brakes on silly speculation trading (read: gambling for the rich).
Let us live so that when we come to die, even the undertaker will be sorry -- Mark Twain
So Steve Jobs pulls this stunt too, what about minimum wage laws? :} (seriously)
Can we honestly say "good faith" is their motive and not income tax?
Receiving additional income does not result in a situation where you're paying more in taxes than that income. So Page, Brin and Schmidt suddenly started making $1 million/year in salary, they would still be taking home more money after income taxes than if they weren't receiving that money. So there's no motivation based on income taxes to not receive additional salary.
Personally I think they take $1 salaries because they want to appear approachable at work and remain effective leaders. Steve Jobs does the same thing.
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It isn't about tax evasion or good faith. It's a way to link productivity to company success. If stocks are high, they make more money, if they aren't they make less. Many companies have started doing similar things, as linking rewards to success is far more profitable for everyone. Shareholders benefit greatly, as the leadership has more invested in the company, so is more focused on its success. Paying someone a 500 million/yr salary with no difference if they do well or poorly leads to poor results. It's basic economics and psychology: proper motivation results in proper rewards.
Microsoft Sucks, F/OSS Rocks. I get mod points now right?
There is a difference between Stock, and Stock Options. These guys aren't just the CEO's, they are the founders. When they sell off stock, they are selling off their parts of the company they founded. You know, the one you use every day for searching, that has enriched your internet experience. Presumably they and their investors have some split of the available stock, and they are simply adjusting this ratio more toward the investors. They could quit tomorrow, and STILL sell that stock, or keep it, and just live off the work they've already done.
The point is, they aren't being PAID in stock (That's not part of their current salary, reimbursement for their current work), that is the reward they have for risking their money, work, and reputations building this thing called Google in the first place.
Where are we going, and why am I in this handbasket?
I think you are missing the entire point. Most executives don't opt for similiar salaries, because they don't have faith in the stock price of the company. If I am an executive of a company where the value of the stock GOES DOWN, I could be making a whole lot of nothing if I am only paid in stock.
You have to be pretty confident in the value of your company to accept stock as payment.
In terms of business, Google so far is a great business that tries to do no evil and approaches a lot of problems from an academic standpoint. It makes them money and it makes people's jobs easier. Good for them and good for us.
But $160 million in stock options? $1.68 billion in 2 years? Damn! Do you know how much rice and grain you could buy for starving people? How many middle class and working class people you could employ with that? The 8th highest paid executive in the world is the CEO of ExxonMobil and he made $88 million this year.
It's good that these stock options are tied to performance, because if Google tanked, they'd get nothing. But let's put the amount of money into perspective. Can we tone down on corporate greed? Did these guys really need that much in stock options?
I'm just saying...
"All great wisdom is contained in .signature files"
Ask yourself what the various levels of government have done to earn a quarter of the wealth spawned by Google.
On top of all the standard responses (cops, roads, an army, etc), they built the Internet, without which Google couldn't exist.
I don't fault the Google guys for their compensation or their decision to try and defer some tax issues. Hell, I don't even fault them for turning their pseudo-salaries into a miniature news event. They're in the business of growing Google, and part of that is playing up the "Google mystique."
Yeah, they make a lot of money no matter how you count it. But you know what? So can you, if you come up with an idea that's good enough and get people to buy into it.
We should look upon home-run successes like Google for inspiration, not class jealousy.
"It was a summer's tale: Just a boy, his Linux, and a head full of dreams..."
These guys started at the bottom of the pile, right? Just like the great majority of us, they were workers. Then they had a great idea, and now years later, they're billionaires because of it. It's the american dream. Why does everyone assume that just because they've made money they've turned to the dark side? 99% of you put in the same position wouldn't be turning down the billion dollars from stock sales. You'd have earned it fair and square, and you'd be very happy with yourself. I'm happy for them too, they've created probably -the- most useful tool on the internet, IMHO. Dave
Specialization is for insects. -Heinlein
What they've effectively done is told their employees: We care about the company
actually what I gather is they told the employees "we care about Wall Street" which can be quite different from caring about the company (lay off half of your workforce and outsource and the stock will go up, be conservative with your numbers and projected earnings and the stock will go down).
I personally wish the stock market just disappeared, but fat chance of that happening.
-- the cake is a lie
that some CEOs get for getting fired that really pisses me off!
Enron. Enron. Enron. Ummm... Enron?
Does anybody here really believe that a CEO's perspective changes if they get a $1 salary versus a multi-million dollar salary when they have a ton of stock and options? Good CEO's will feel a vested interest in the company's performance, and bad CEO's will not. Awarding them scads of cash may keep them on board with your company, but that's all it buys you.
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If this was Microsoft and Bill Gates most of the posts here would be calling it a meaningless PR grandstanding that is somehow worse than if he didn't do it, like they did against him giving away a fortune to charity.
As I sit here in my cube wasting time waiting for the clock to tick to 5 PM and dreaming of having only a couple of million dollars so I could live off the invesment income, I am pondering why would anyone want to work after they have made $500 million or $1.5 billion dollars?
I could think of so many more fun and exciting things to do than... work. How many of us here worked for dot-coms and on paper were worth millions? I was and kept pestering our CFO as to when I could dump all of my shares and quit. Sadly, we went under before I could dump. If I was an employee of Google and my stock options were worth over a couple of million, I would dump and run.
Kind of makes you wonder about what kind of people stick around when they are already super-rich. Bill Gates, Steve Ballmer, Steve Jobs, etc. Why do they continue to work? Is it because they have nothing better to do?
Ask yourself what the various levels of government have done to earn a quarter of the wealth spawned by Google.
There's two separate issues raised by that question. The first is what has the government done to deserve a part of that money and the second is why it comes out to a quarter of these very large values. These are two very different issues.
The first one seems pretty obvious for people who accept the social contract. As others have stated, the government builds roads, provides fire stations, police stations, hospitals. They build schools (one or more of which likely provided a pretty good education to Page and Brin), and provide an army that would protect Google from the Chinese military if they decided to invade Google for not censoring search results. It's far fetched, but the point is still valid...the military, as a concept, offers protection to people and businesses in the US. As part of our participation in our society, we agree to pay a reasonable amount to fund all this.
What's reasonable is another matter...
Which brings me to the "why does it have to be a quarter?" question. This is less a philosophical question and more a question of how everything is implemented in this country. I'm not going to argue that things aren't broken. Government spending is out of control. If an individual spent money like the government, they'd be bankrupt with the lowest possible FICA score. Billions of dollars are wasted on pet projects for senators that just want to make their constituents happy and aren't taking into account whether it makes sense to spend the money at all. It doesn't take a genious to see the impending currency crisis that'll hit this country in the next couple of decades. If the government were to get out of debt (yeah, yeah, you can stop laughing now...I'm talking hypothetically) and curb it's spending by cutting back on unnecessary spending, it could be a whole lot less than a quarter that would need to be carved out of those capital gains.
Well, to sum it up... ;)
They only get the nominal 1$ as a yearly salary, and instead get paid in stock and stock options.
This means that they have strong faith in their company (if the stock crashes they'd lose alot of money compared to just having a ordinary 6-7 digit salary)
And regarding the sale of stock - its stock they already own, so they are taking nothing away from the company. Its like turning part of your coin or stamp collection back into cash. Well, its a tiny bit bigger than that but the principle is the same.
+++ MELON MELON MELON +++ Out of Cheese Error +++ redo from start +++
Except they sold the friggin stocks so they're billionaires, and what happens to Google now really won't affect them one way or another, except perhaps that the rest of their stock might not be worth $1B when they get around to selling it. It's generally Not a Good Thing when executives sell off lots of stock. See: Enron, Worldnet AT&T, et al.
True, except that most financial planners tell people to diversify their holdings. Now, if your whole fortune was tied to a single company's stock, wouldn't that be a bit risky? They've only sold a small chunk of their total holdings, so it's not an entirely bad thing from a shareholder standpoint.After all, you wouldn't want most of your 401(k) to consist of your company's stock, why should the Google founders do the same?
"Ask yourself what the various levels of government have done to earn a quarter of the wealth spawned by Google."
Well I don't know how much of the following justifies the government taxation, but it certainly lists ways in which the government has assisted Google.
Firstly, Brin & Page were grad students at Stanford, recieving their undergraduate education from publicly funded Universities and reciving federal grant money to do the fundamental research that made Google what it is today. Part of their success revolves around being at the right place at the right time, but another part is that they had the opportunity to solve a problem first, and come up with the money strategy second, rather than the other way around. Because they a quality education and the government paid opportunity to study interesting problems, they were able to create an enourmous amount of weath, for themselves and for society. Hell, even Stanford operates on the charity of a former governor, rather than a series of well informed and rational choices made by students. And I think it's fair to say they still recieve a good sum of money in the form of federal research grants.
Second, Google exists to search the vast amount of information available over the Internet. For Internet Libertarians, the funding behind DARPAnet and even the development of HTML has to be a strange paradox. Certainly, there are plenty of governments under which the free dissemination, indexing and ranking of communications is not welcome. If I wished to be misleading, I might say that the Libertarian camp is divided over the issue -- there are as many Libertarian governments in favor of internet censorship as there are opposed!
Thirdly, Google the corporate entity benefits from a large number of local, state and federal services. The SEC provided them with a framework within which they could safely offer a number of shares for initial public offering, even in a unique way (despite complaints from many within the private sector), and gives shareholders confidence that the reports they read are accurate and should the need or desire arise, they can get a fair market price for their stock. The legal system provides Google with a fair and impartial jurisdiction within which suits by and against Google may be held (certainly Google gets its fair share of suits from those upset about being indexed--justified or not). Should the Googleplex burn down, the local fire department has been and will continue to be on watch for them. And for those Googlers that don't rollerskate to work, the State of California and the Federal government help to provide safe roads and highways with which to commute over. Should Google go bankrupt, the government provides a fair system of bankruptcy within which the company may survive, to the benefit of the majority of creditors.
Finally, the employees of Google don't have to worry about their status as Immigrants, Jews, Blacks, Men, or Communists interfering substantially with their business dealings. Should they be treated substandardly for these inherant traits (for example while finding a house in the SF market), the governments provide them with a recourse under the law for this irrational discrimination.
Now you're certainly welcome to claim that taxes are too high, that the government is accomplishing their goal too wastefully, or the like. But perhaps the State of California uses the high tax rates as an migratory throttle, to make sure that people planning to make money on a large scale do so outside their state? If California is still enjoying a growing economy and population, despite the high tax rate, perhaps enough people like the system to make it work?
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We have similar debates over the funding of the National Health Service in the UK. The answer is that to allow the rich to opt out would undermine the whole point of any social security system, which is to protect the poorer members of society who *can't* afford a pension, health care, or to be unable to work for a period of time for whatever reason.
Social funds like SS and the NHS recognise that capitalism depends on inequities in the distribution of wealth as part of its basic mechanism and spread the cost of their funding across the whole of society, leveraging the wealth of those with more money to help out those who have less to help mitigate that.
The alternative is to suggest that all taxation should be hypothecated and that you have the right to withdraw your participation in those areas where you're not going to directly benefit from a particular levy. People who don't have children or who send their children to private schools would be allowed to opt out of paying for state education, etc. The logical outcome would be that you pay a fee to the fire brigade when they attend a fire at your house, or to the police to investigate a burglary there and pay nothing at other times.
Taxation is not a consumer service fee.
Do you happen to have a source for that? As I recall, the infrastructure of the Internet (land-lines, routers, servers, etc.) is almost entirely privately owned.
Possibly true now, but it's doubtful that it was built or would have been built without the government. Even as late as 2004, more than half the people on the Internet were connected over telephone services, whose infrastructure is heavily dependent on government support. I'd be pretty shocked if government funding (direct, or via the use of eminent domain power, rights-of-way under transportation infrastructure, tax easements, etc) wasn't a major factor in funding even modern Internet infrastructure. And, of course, there wouldn't have been an Internet as we know it without 20+ years of DARPA/ARPAnet research and buildout. Not to mention that things like top-level IP block allocation, DNS management, etc were all managed by IANA (a government body) when Google was being built, and Google most certainly relied on those services.
Of the "standard responses" you mentioned, only the army (or the military in general) is paid for by national taxes. Police, roads, fire protection, schools--almost everything else, in fact--is the state or county's responsibility.
Of course, the post the AC was replying to went out of it's way to bring state taxes into the equation. Indeed, the particular quote he/she was responding to was "Ask yourself what the various levels of government have done", it was not at all limited to just the federal government. States and counties are part of "the various levels of government" last I checked.
In any event, I'm certain that Google could probably have provided all of the services it desired for its own protection for far less than a quarter of its annual income, and probably does so anyway (most major companies seem to employ their own security forces, for example)
Are you serious? Building-security is a tiny fraction of what the police provide. And even there, the private security forces would be pretty toothless if there weren't public police forces roaming the land to keep criminals from building up small armies to raid places, making people know that if a crime is committed there will be tremendous investigative power brought to bear on them, and so forth. That aside, Google would certainly have trouble funding officers all over the country to deal with civil and criminal investigations, execute warrants, etc--and wouldn't have the authority to do so even if they could. And what would Google do with the criminals it caught? Execute them? Build private prisons? Surely in the absense of government the private sector could eventually replicate a lot of its services, but that infrastructure isn't there and Google is far from large enough to build it all out itself.
rage, rage against the dying of the light