
Google Makes Massive Counteroffers To Retain Employees - bigstorm
http://techcrunch.com/2011/04/06/google-said-to-have-high-level-mole-at-twitter-makes-massive-counteroffers-to-retain-employees/
======
brown9-2
The chances that the players in this game are using careful leaks to
TechCrunch, either with real or fake information, in order to make moves
against the other players is very high. As readers we shouldn't really trust
that what Twitter sources tell TechCrunch is totally legit, or the same for
what Google sources are telling TechCrunch - playing TC or other members of
the press in order to help tilt the direction of discussion one way or the
other seems like a pretty obvious move.

For example, Google Competitor X sending TechCrunch fake information about
Google's desperate-sounding counter-offers helps reinforce the perception of
their desperateness.

Also, these two sentences don't really add up:

 _Google may have paid as much as $150 million in stock grants to retain key
product employees Sundar Pichai and Neal Mohan, say multiple sources. Both
were offered the chief product role at Twitter_

 _Regardless, the fact that large fortunes are being handed out to mid level
technical managers is somewhat of a red flag in general._

------
grellas
_Multiple sources close to Twitter have said that someone with access to
Twitter’s most confidential information, such as who they are interviewing for
key executive spots, may be leaking that information directly to Google._

This sounds dubious to me. It is not only unethical for a senior Twitter
employee to be leaking such information but it is plainly _illegal_. An
employee owes a fiduciary duty to his employer to perform his duties strictly
for the benefit of that employer. Such an employee also has obligations not to
disclose or misuse any trade secret information belonging to that employer.
Both of these are pretty serious legal obligations, the violation of which
would subject not only the direct malefactor to major liabilities but also
anyone conspiring with him to commit the wrongs.

This story, then, assumes that Google is effectively engaged in knowing
illegal acts of the most serious kind. While that in theory _might_ be true,
it assumes that (1) Google has a company ethic that would tolerate such
willful misconduct, and (2) Google would be stupid enough to engage in a
course of conduct that could pretty readily be exposed, much to its injury in
law and in reputation.

This doesn't ring true for me.

In addition, grants of conventional restricted stock are in fact _sales_ of
stock to a recipient. That means someone has to pay for them. Assuming the
Google stock here is being sold at fair value, that is one hefty price tag for
an employee to pay. Of course, a board of directors might authorize payment by
a loan to the employee but that loan would need to be full-recourse in order
not to create inordinate tax problems for the company. This means that the
employee would borrow, in one case, $100 million, and, in the other, $50
million, on terms for which he can be personally sued for failure to pay. And
what would the employee get for his $100- or $50-million price tag? Well, in
the normal course, stock worth just that. So where is the bargain for the
employee? Even with a discounted price, the risk to the employee would be
enormous because the deal would effectively be a bet that Google's stock will
increase significantly in value before the stock vests and the payment comes
due. Again, this doesn't really make sense. CEOs take such bets with
restricted stock on occasion when a company is still fairly young (e.g., Meg
Whitman with Ebay), but this is unheard of for an engineer employee, even a
high-level one.

A deal of this type could be structured with stock options that would not need
to be paid for up front and would not result in a tax hit or payment
obligation to the employee upon grant. But this piece specifically uses the
term "restricted stock." Perhaps this is not really restricted stock proper
but some sort of restricted units that mimic stock but really constitute
contingent employee bonuses. But the piece is suspect in its confident
assertion that "restricted stock" was used.

Finally, there are the public company implications. Whenever a company incurs
a material event, it must be publicly reported in fairly short order in SEC
filings. A $150 million outlay? That would seem material even for Google.

Then there is the question of board of director responsibility. Directors have
fiduciary duties to adhere to in making stock grants. How would the Google
board justify these grants? And how could they justify them based on illegal
"tips" received from a Twitter employee.

I may be missing some nuances here, as my firm does not often get deeply into
fine points of public-company law. On its face, though, this one does not add
up when the legal factors of which I know are taken into account.

~~~
nl
_Whenever a company incurs a material event, it must be publicly reported in
fairly short order in SEC filings. A $150 million outlay? That would seem
material even for Google._

No it's not - employee compensation is an ongoing expense. You don't see
Goldman Sachs doing disclosure everytime someone gets a bonus!

Anyway, Google discloses stock grants every quarter.

 _Stock-Based Compensation (SBC) – In the fourth quarter of 2010, the total
charge related to SBC was $396 million, compared to $276 million in the fourth
quarter of 2009.

We currently estimate SBC charges for grants to employees prior to January 1,
2011 to be approximately $1.6 billion for 2011. This estimate does not include
expenses to be recognized related to employee stock awards that are granted
after December 31, 2010 or non-employee stock awards that have been or may be
granted._

[http://investor.google.com/earnings/2010/Q4_google_earnings....](http://investor.google.com/earnings/2010/Q4_google_earnings.html)

~~~
grellas
OK, point well taken. Thanks for the correction.

------
ChuckMcM
This isn't an April Fools post is it? I mean seriously, if you're willing to
pay $50M or $100M to keep a single employee from walking, what happens if they
die on their commute into work? What sort of risk are you carrying anyway?

And I didn't think I could be amazed by 'Google scale' any more, sure proves I
was wrong on that.

~~~
ig1
I'm wondering if they failed to check the date on the email of their tip-off.

Extraordinary claims require extraordinary evidence.

I might be mistaken but I believe Sundar Pichai isn't an american national, in
which case he'll be working on a visa. And in the US work visas require a
public declaration of salary (the published data has the names stripped but
frankly at a $50m salary I imagine he'd be easy to spot). So come paperwork
renewal time we'll be able to see exactly how accurate TC are...

~~~
bdclimber14
I like where you're going, but it mentioned it was $50MM in stock, not salary.

~~~
hyperbovine
I would like to believe that the US visa laws are insufficiently moronic to be
defeated by such a ploy... can anyone confirm?

~~~
jhuckestein
The laws are moronic, confirmed.

I don't know what gave the GGP the idea that salaries are publicly declared in
visa filings (which are not public anyway). The laws are not THAT moronic.

~~~
groby_b
As far as I know, salaries _are_ included in H1B visa database. Ah, here's the
article where somebody mined it for game developer salary:
<http://realtimecollisiondetection.net/blog/?p=107>

~~~
jonburs
A company hiring H1-B workers must show that they're paying average+ wages for
the position [1]. They need not disclose actual salaries paid to individuals,
nor are they precluded from paying above market rate.

1\. <http://en.wikipedia.org/wiki/H1b>

Employers must attest that wages offered are at least equal to the actual wage
paid by the employer to other workers with similar experience and
qualifications for the job in question, or alternatively, pay the prevailing
wage for the occupation in the area of intended employment, whichever is
greater.

~~~
ig1
Looking at the H1B dataset it includes two fields "proposed wage rate" (what
the company proposes to pay the candidate) and a "prevailing wage rate" (the
market rate).

I believe companies are also required to disclose to this information to other
employees on request (to provide a check that H1Bs aren't being used to
replace employees with lower salary staff)

------
bbatsell
$50m in outright stock grants vested in only two years for a product VP?

Not really passing the sniff test for me.

------
btilly
Let's see how crazy this is or isn't. From
[http://www.google.com/finance?client=ob&q=NASDAQ:GOOG](http://www.google.com/finance?client=ob&q=NASDAQ:GOOG)
I see that Google has a market cap of $184.61B. According to
<http://en.wikipedia.org/wiki/Google> Google has $46.24B in equity, and 24,400
employees.

Equity tends to add to market cap 1-1, so Google's market cap from ongoing
operations and potential for growth is $138.37B. That works out to about
$5,670,000 _per employee_. Considering that Google's stock price still
reflects a market belief that they will have a lot of growth in their future,
most of that market value lies in the actual people. The average Googler is
worth millions to Google.

I have absolutely no trouble believing that key employees with a lot of talent
and institutional knowledge are worth many times the average. The main thing
that is shocking if this story is true is that Google has a good enough
understanding of who is worth what to the company that they can properly
recognize and act on that fact.

~~~
staunch
^ Google employee.

~~~
btilly
Actually not a Google employee any more. I left some months ago.

~~~
staunch
Alright. Nevermind then :-)

------
olivercameron
$3.5 million for a key employee I can deal with, but $100 million? It feels
like absolute lunacy, if true.

~~~
sage_joch
If it turns out to be true, I will probably sell my Google stock. I'd always
felt that it was a pretty safe holding, but any company that could piss away
money like that is not one I want to hold.

~~~
jacques_chester
More to the point, it's not your dividend they're taking, it's a direct
dilution of the value of your shareholding. A small tax levied on all other
shareholders.

------
latch
"If you're a Google employee and you aren't out interviewing at Facebook,
Twitter or Zynga you are a moron"

This is why this has to be false. The precedent would be destructive. How many
employees will go out looking for a job to use as leverage, not get a google
counter offer, and just leave?

~~~
tzs
Or it could be clever. Google is at a stage in their corporate life where they
need people who aren't primarily chasing money. Maybe this is a plan to get
those people to leave.

~~~
angryjim
Who are you kidding? We are all chasing money.

~~~
tzs
Well, in the sense that we have to have money to survive generally, so we all
have to take jobs that pay money, then yes, we are all chasing money. But that
doesn't mean we all make the amount of money the PRIMARY determination on
where we work and how we spend our time.

Many of us would take a lower paying job if it meant more interesting work, or
a better work environment or location, or better long term stability.

------
nethsix
Usually I go straight to HN comments to read the first few ones to determine
if a posted article is worth reading. You guys/gals rock because you help me
avoid tabloid stuff and save precious minutes of my life.

~~~
brndnhy
I didn't think I was the only one.

There aren't too many, or any, other places where you get a peer level of
trust from an otherwise anonymous community.

------
aChrisSmith
Since when did TechCrunch become a tabloid?

~~~
benologist
When they realized it sold more ads + took less time to write the pieces. Then
AOL bought them and it became official!

~~~
bigstorm
well said!

------
trotsky
_Multiple sources close to Twitter have said that someone with access to
Twitter’s most confidential information, such as who they are interviewing for
key executive spots, may be leaking that information directly to Google. In
this case, Google may have acted on that information too quickly. And people
at Twitter, say these sources, are steaming mad._

I wonder what google services twitter hiring execs and others use. In the
"privacy is dead" age you seem to be able to find out an awful lot about an
awful lot if you're willing to go out and piece together public data.And in
the realm of open source intelligence gathering, it's unlikely there is a
bigger king than google.

I wonder if multiple people at twitter can be found googling the googlers in
the days or hours before they meet for a hiring discussion. My money would be
on yes, and that's only one of many possible sources.When I was on campus in
Redmond a few years ago I was pretty impressed by how tailored the google
search ads and even some SERPs in terms of trying to poach from MS.

------
jonmc12
Just call it a pre-emptive talent acquisition. Since both Twitter and Google
know that these product guys could go start their own venture, raise $20M, and
then sell the team to the highest bidder, they are just preempting the
process. Gotta think ahead to overpay talent before your competitor can.

------
mayukh
Linking to public profiles: <http://www.linkedin.com/pub/neal-mohan/0/278/520>
<http://www.linkedin.com/in/sundarpichai>

I would expect a statement from Google on this (whether its an April Fool's
joke or not). There is no way they can let their other employees think that 2
guys are making bank here. Its just not sustainable to let employees think
that this is the way forward to negotiate salaries

~~~
jacques_chester
I think for share packages that large they'd need to make disclosures to the
SEC, wouldn't they?

------
JMiao
when google poached from microsoft, all ballmer did was throw a chair out the
window.

------
wallflower
If all you get from your job is a (big) paycheck, then you are underpaid.

Yet, I know many artists who stretch their creative souls and struggle
financially.

I think there is a happy balance but that is not static, needs to be
readjusted as life unfolds, from young whippersnapper programmer to family
comes first tech lead.

------
spencerfry
My friend just left Google NYC to start his own company. He didn't give Google
enough to give him an official counter offer -- he had already made up his
mind -- but they did say that it would have been significant.

------
jhuckestein
Thanks for not using Techcrunch's title insinuating that there is a high-
ranking Google mole within Twitter.

~~~
hamedh
that's probably the only thing techcrunch is good at these days, coming up
with these exaggerated titles. these days you can't help but roll your eyes on
all the tabloid articles they post.

