Google's parent company was briefly the most valuable company in the world, and odds are it will climb back to the top rung again. When it comes to how it pays its executives, however, Google falls short of the big leagues.
The holding company known as Alphabet disclosed that its directors elected to give Sundar Pichai - the CEO of Alphabet's money-making Google unit - the equivalent of stock worth nearly $US200 million at then-current market prices.
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Newly-promoted Google CEO Sundar Pichai has received restricted shares worth a staggering $199 million, but there's a catch.
Pichai can start to cash in the shares next month if he wants. As long as he stays at Google until the end of 2019, he will own outright the full amount of stock.
I'll leave to others the question of whether it's fair to pay a corporate executive in stock certificates worth more than the annual gross domestic product of the Marshall Islands.
The point is these kinds of stock handouts based solely on tenure make Google an outlier in corporate America, which is starting to pay heed to complaints about executive pay cheques that balloon even if management does a poor job for the owners of the company.
About 83 per cent of the CEOs of S&P 500 companies receive some type of stock pay that is tied to future performance such as share price or profits, according to compensation research firm Equilar.
Google has faced criticism before over pay cheques to Eric Schmidt, Google's original CEO, who is now a member of Alphabet's executive committee.
His stock compensation also kicks in as long as he sticks around. As long as Google's ad revenue and stock price have grown by leaps and bounds, its stockholders have given it a pass on matters like compensation. That is understandable.
But board practices that fall shy of the gold standard of corporate governance can ossify into bad behaviour - especially, as in Google's case, when company founders have outsized power compared with other stockholders. For fresh evidence of the potential risk, check out the drama at Viacom.
Silicon Valley is not known for its deference to shareholders on executive pay or most other issues. Yet some of Google's big tech peers have started to drink the good governance Kool-Aid.
When Tim Cook was promoted to Apple's CEO in 2011, the board initially handed him the equivalent of stock valued at nearly $US400 million at the time, now worth about $US660 million. As with Pichai's stock grant, Cook's shares vested based entirely on the calendar, half in 2016 and the other half five years later.
In 2013, however, Cook and the board listened to shareholder feedback and went back to the drawing board to rework his stock award. Now up to one-third of Cook's stock is at risk if Apple's stock price gains plus dividends aren't among the top one-third of companies in the S&P 500.
These kinds of stock handouts based solely on tenure make Google an outlier in corporate America.
Oracle - another founder-dominated tech company that has faced criticism about its executive pay - has started to pare back how much it pays top management. Microsoft also ensured CEO Satya Nadella only receives a full payout of his stock compensation if the company's stock price gains plus dividends exceed those of 60 per cent of companies in the S&P 500, measured in three overlapping five-year stretches.
Shareholders have overwhelmingly backed how Google pays its top executives.
In an advisory recommendation on executive pay, 91.9 per cent of shareholder votes in 2014 were in favour of Google's pay practices. It should be noted that Google's founders, Larry Page and Sergey Brin, together hold about 54 per cent of all voting stock in the company, and presumably they cast ballots in favour of their company's compensation practices.
Public technology companies like Google, Amazon and Facebook that are effectively controlled by their founders say this arrangement lets them focus on building the company without distractions of short-term market thinking. Noisy shareholders can, however, sometimes be a good thing.
Boards and executives have to make doubly sure their strategies can stand up to scrutiny, and companies are stronger for being battle-tested by shareholders questioning how they use their money. As giant technology firms crowd the ranks of the world's most valuable companies, they have to start behaving a bit more like everyone else in corporate America, and that includes hewing to the highest standards for executive pay.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
Lest we forget, the owners of a public company are its stockholders. I acknowledge Pichai isn't a public company CEO, but the chief executive of Alphabet's largest subsidiary. Google co-founder Larry Page is CEO of the parent company. Given his power at the company and his pay cheque, it feels fair to lump Pichai with public company CEOs. The company asks its shareholders to weigh in every three years on executive pay, and 2014 was the most recent election.