I can understand why this comes as a shock to some; it may be difficult to accept that another person doing his 9-5 job can bring so much value to a company. I always suspected such value creators exist (Jobs would be one).
So good for him for delivering, and good for Google for acknowledging and compensating accordingly. And good for me too; I'm taking my first steps as an advertiser with Google and I'm really liking what I'm finding so far.
That is, if you make 10,000 people executives and make them make decisions by flipping coins, won't 100 of them be in the top 1% even if success is the result of successive chance outcomes?
Maybe that's why people pick on CEO salaries but stay silent on the shareholder profits from the very same corporations. You can imagine 100 million dollars of oil barrels or real estate, but you can't imagine a 100 million dollars mind.
So you have a company wide vote on major decisions? That's very interesting. How did you vote on buying Motorola or replacing Yelp and other local results with Google Local? What about Google+ being added to everything?
Disclaimer: I have never worked with Neal Mohan and not familiar with his output. But, product decisions are taken collectively and by relying on data. Anything beyond that doesn't fit Google's culture and internally you'd have a bad time to find engineers that wants to work for you. In order to be in the genius status at Google, you have be a true inventor. We're more or less capable people and giving an impression that Google's core business is run by some 500-600 slides is ridiculous.
That's obvious, and that's why Google and other corporations have many highly paid executives. But someone has to make the tough decisions, day after day. You should read his original comment
Getting the very serious offer from Twitter was the best thing to happen to Neal.
I can only imagine the negotiation with Google that he must of had. It probably went on the lines of something like this -
"Hey, I really love it here at Google. I am really excited with what we are working on and want to deliver it but this Twitter offer is just something that I can't ignore. I am looking at the financial future of my family and I would be doing them a disservice if I don't consider this offer seriously. Is there anything we can do to just make this offer go away."
Neal had the upper hand. Worst-case scenario for him would be that there would be no change. He would continue to work at Google. Next best case scenario would be that he would be working at another mega-tech company, and getting better compensated with potentially even greater upside.
Google was in a position of weakness in either case. If they did nothing and he left, it would amount to even more collateral damage as others would get the message that Google can't compete and Twitter would make even more offers to others.
By paying him out, they basically paid him the opportunity cost in real dollars that he may have had if he moved to Twitter.
In all of this, Neal's professionalism would have tipped the favor on his side.
But then again, I'm not the guy who does salary negotiations...
I think that's the difference between a professional and an amateur.
Saying something along the lines of - "hey, I'm in demand and thinking of moving - business is business" even if its true, kinda just would make any company want to kick the person to the curve. Maybe not at that moment, but believe me, that person is now on some blacklist. As IT people (and yes, I am generalizing here) we don't fully appreciate the power of being blunt without being blunt. A lot of it has to do with saving face for both sides. It's a skill I even have to work on but for the people that I have seen that are very good at it, they are very effective with their work.
It's like doing a deal with salesperson and afterwards you realize that you maybe got screwed a little bit, but gosh darn it, you still like that salesperson quite a bit. I guess this falls under charisma.
In terms of the financial future, I don't think anyone is talking about anybody struggling in these positions. I wasn't implying that in my statement. What I was implying was that given any rational person (even one with millions), having a choice between making 10x more or 5x more or staying the same, all other things equal, it would be hard to not consider the choice. Money is Money. And, one thing about people that have made the millions, they still tend to consider every dollar as important as the next, since they realize quite rightly how hard it is to make money.
It's very likely that Neal was facing this 5x-10x type of multiplier. I do think that when you are facing the 0.5x-2x multiplier than the decision does become much harder.
But it would be cool if Larry Page said "your old org, from intern to director, says you are the the grease in our money machine, we will always pay you more than any one else would offer, and we want you to find out how high we can reward you"
Think of the sheer amount of considerations that go into a decision like this. Higher-ups at Google must acknowledge:
* Offering someone an enormous sum only after someone else has made you an offer can be off-putting. Consider the many articles written about never making counter offers, or never accepting them.
* Along the same lines, if you're not offered a large enough sum to stay, you might take it as an insult. "They're only offering me this much money after I've considered leaving?" Google certainly made sure the sum was large enough, by any count.
* Offering an enormous sum to one person may tempt others to fish out offers from other companies. Others may feel like they're never going to get a raise unless they are courting or being courted actively.
* Google's decision-makers (or check-writers) have to be careful about the number picked. They want to send a message to the person, and to other companies, and to the market. But they probably don't want to end up paying $100m for every high value employee. Luckily for Google, if its gonna be a cash arms-race against other companies, there are few that can do serious battle with them.
* Speaking of high value employees, while you might get person A to stay, you make make resentful group B. After all, there's already a comment here: "It's only a matter of time before us little developers get's similar packages!" It's not a stretch for anyone to sympathize with that view.
And then, at the end of all that, people in a room pursed their lips together and quietly nodded while somebody pulled out the (metaphorical) checkbook. This guy is staying, it's going to be this much money, and we're going to make it purposefully public knowledge. Signals everywhere.
It seems to be a dangerous game. Others may (as a default) suddenly feel unappreciated since Google hasn't made them an offer to keep being a Googler, and perhaps hasn't approached them with any considerable raise in some time. 100 million ensures that you keep a single employee, but how many do you alienate at the same time?
Hard to blame Google's decision, I'm sure they gave it much more thought than I have. I wish I could know what they're thinking, it's just so fascinating what goes into this.
Giving him $100M was more of a correction because he arrived at the company later than the other equiv execs. Most of the top tiers of employees at Google, which is where he would be, are worth hundreds or millions and more through vested stock, new options, bonuses, etc.
Of course the average software engineer at Google can't make similar decisions, so they can't be worth that much even in theory (unless they happen to invent something revolutionary).
So my point is that yes, CEOs can be "worth" thousands of times the salaries of the average employee, but that's not fundamentally about the skills of the CEO, but because the CEO happens to be in a position where his choices/strategy/etc have extremely large consequences. (In this example Mohan is not CEO though, but makes similar choices that a CEO does).
A real world example would be Stephen Elop at Nokia: some say that he has made Nokia lose billions of dollars, when another CEO might have made Nokia save that money.
For traders, Daniel Kahneman has shown that they have no skills whatsoever (see http://www.nytimes.com/2011/10/23/magazine/dont-blink-the-ha...). I do believe that CEOs have some skills but the expected value of these skills is much lower than the potential impact of their decisions. Having been a company owner, I have learned that how CEO decisions are executed (by all the other people in the company who don't make outrageous salaries) is often much more important than the decisions themselves.
Google either gets 1000 extra engineers or gets this probably really smart guy. I guess we just have to agree to disagree since there is no way to measure how valuable a CEO is. I do think that the burden of proof is upon those that think those salary differences is justifiable since "extraordinary claims require extraordinary evidence."
> A real world example would be Stephen Elop at Nokia: some say that he > has made Nokia lose billions of dollars, when another CEO might have > made Nokia save that money.
Not a good example since Symbian has been a dead end for years and Nokia has failed to make desirable smart phones. Putting all the blame on him ignores all the bad decisions all the other people at Nokia did.
Contrast that with, say, 3M. The Post-it Note was a bottom-up invention. One guy came up with the adhesive. Another person figure out what to do with it. They've sold billions of dollars worth of the stuff. As far as I'm concerned, that makes the 3M CEOs much smarter than the hands-on ones. Instead of treating the company like a giant prosthesis, they created an ecology.
And in the past I was admin in charge of a billing system for British Telecom and when we had our first million pound month (about $5,000,000 in today's money) the CTO (one of Vint Cerf reports I believe) Nudeged me and said this had better be right or we are both out of a job :-)
Seems perfectly sensible to me. Are you telling me that there aren't developers out there who have thousands or even millions of times greater impact than an average coder? Some people write code that impacts literally millions of people (or even billions), code that generates literally billions or even trillions of dollars in value.
This isn't about productivity, it's about impact.
Google started out as a very small company and yet had many cornerstones of their core technology stack laid early. And the technology of pagerank, treating data centers as giant computers, massively automating IT operations, etc. is what allowed the company to dominate search and is a key factor behind their multi-billion dollar annual revenues of today. The people that built that technology are easily millions of times more valuable than the average coder in terms of their contributions to the world.
“Socialism never took root in America because the poor see themselves not as an exploited proletariat but as temporarily embarrassed millionaires.”
Slightly off-topic, but your statement is the programmer's equivalent to that. We all want to be the developer that is a million of times more important (and end up making huge sums of money/having a worldwide impact/whatever). This argument appeals to the ego of a lot of people here I think.
Though maybe I'm just projecting.
I know plenty of Google millionaires, and they are indeed really smart. But no smarter than the other top-tier people I know. The reasonable explanation for their wealth versus equivalently good people is, depending on how you view it, either circumstance or luck.
That this guy can extract $100m from Google is certainly true, but that orthogonal to the point you were replying to, which is about it being right.
$10m a year for a guy running a $7b business.
Since the display ads is one of Google's high margin cash cows, would guess quite a bit higher on the list in profits.
Google has about 1/2 the earnings of JPM, about 1/3 the book value, but a larger market cap than JPM, and let's just say there's some wiggle room in what JPM reports, loan loss reserves, 'debt valuation adjustment', non-marked to market 'whale' losses, etc.
Anyway, as a shareholder I have no problem at all with that kind of pay package if it's for a legitimate superstar who could otherwise run a competitor, it's reasonably tied to performance, not guaranteed if he pulls a <name a disaster/CEO scandal>. If he's adding 0.5% of earnings growth compared to the next best candidate it's a bargain.
Point is that he's not clearly getting low-balled at that number.
$2.2b in profit will put you in the 90s on the Fortune 500. Google is 16th in net profit margin at 25.7, JPM 49th at 17.1 . the saying is, earnings are an opinion, cash is fact.* JPM's earnings are more of an opinion than most.
*although cash can be generated from crazy contingent liabilities and derivatives, eg AIG.
He knows a lot of similarly well placed people and knows a lot of Google's business which competitors would be interested to learn about (nothing informal on paper of course), and like a tin pot dictatorship, stability is better than churn, regardless of whether the stable leaders are amazingly good or not.
I think Mohan is a little more than just another "big wig." Google probably should have given him an incentives package similar to $100 million a long time ago.
I mean we're talking about billions of dollars. So much human talent, skill, intelligence taken away from really important things... Just sad...
Not to mention- while he is getting paid a monstrous sum of money, think of how many people he is also enabling to have jobs, both at Google and the businesses that use their services. The direct effect is obviously very different, but I'd bet he does a lot of good for the world in his own way.
Not everyone needs to cure cancer to do something great.
There's a quote from the 1950's from a judge very skeptical of extending trademark law to the effect of "we shouldn't allow building brands too much, because then people will buy things for reasons other than product quality and that'll undermine competition in the marketplace by making products non-fungible."
I personally like monopolies, so it's cool with me, but you have to wonder what the internet would look like if Adidas sold shoes and not "footwear experiences."
 There is no profit in perfectly competitive industries, and thus no money to do cool stuff. That's why, e.g., Microsoft is so screwed. It keeps hoping for innovation out of companies like Acer, Lenovo, Asus, etc, that have profit margins of just a few %.
EDIT: This sounds snarkier than I meant it to, sorry. I agree that there are many things that I look at and I think "This is nuts!" - like how cheap products are that get mass produced in China. Someone gets oil from a deep sea well; refines it, turns it into plastic, ships it to a factory, who do stuff with it, put it in a box, put all those into other boxes, ship it, distribute it locally, someone takes all the little boxes out of the big boxes and puts them on display, and I can buy this for a couple of dollars.
Yes, it's weird that we spend millions on Barbie dolls, and not so much on cancer or malaria or HIV or hunger.
that said, I do enjoy the irony of a BI original article being syndicated by another publisher and becoming more popular than the original source
If you compare this with full professorship (academic tenure), that will cost the university about $4 million (assuming $60k/yr - probably $6-7 million if the university is upper echelon). So conservatively this is 10-15x what tenure is.
Neal Mohan sounds like the business equivalent of Jeff Dean 
That sounds no difference from 'think about chemistry all day every day', doesn't it?
I think advertising is more interesting and inspiring these days than many of traditional science areas. Not to mention it's a huge field including bleeding age AI, Big Data, performance, etc.
But if Google pays an average engineer on the order of $100,000 , this is 1000 times the average annual salary as a one time bonus.
That seems exceptional, certainly, but not completely insane.
On the flip side, it might keep a certain type of engineer for bolting for a startup. Even the most optimistic entrepreneur knows the odds of a $100 M payday are pretty much non-existent.
He is a One-percenter at the top of the Google pyramid.
In the rare chance that this is floating around the internet, does anyone know where it would be or more information on it?
BLS says it's more like $86k
Some say 'fund', others might say 'destroy'. What's in a word?
Anyone care to explain how the management was neglectful? Serious question.
Sundar Pichai was also offered $50M. As things have settled down, I doubt if this would happen again, at least anytime soon.
Especially in a company like Google, which has a cultural disdain for empty suits, if your goal is to "become an executive" you'd never find yourself in his position.
It's distinguished from search-based advertising (e.g. adwords). It's basically just ordinary online advertising, and there are a great many different ad networks out there already. However, google's network has been gaining a huge amount of traction recently and took the top spot in marketshare within the last year or so, even pulling ahead of Facebook. In total these sorts of ads are worth around $2 billion a year in revenue for google but both the size of the market and google's share of it are growing at double digit rates so google's revenue from it is likely to double within the next few years.
Did he hand in his resignation and was asked to reconsider? Did he tell them he wanted more money? Did they find out about the twitter offer from outside sources and arrange for the bump?
How did the semantics play out?!
Nothing against this guy. If it were $1 million, or $3 million, I probably wouldn't bat an eye.
A hundred million for a non-technical executive would be OK, if engineers had basic autonomy and open allocation. Then (and only then) they'd actually be able to afford (morally speaking) a $100M payout to a non-technical executive.
Don't call yourself a technical company if engineers in the $100k-200k range can't even fucking change projects until 18 months in (and often not even then, due to a corrupt performance review system) but you're running a private welfare system for non-tech executives.
I know all about Hanlon's Razor ("never attribute to malice what can be explained by incompetence") but somewhere around the 5-standard-deviation incompetence level I go back to malice because 5-sigma is just awful rare. Paying a non-tech executive $100M while engineers making < 1% of that struggle to get a decent project is 8, 9 sigma at the least.
Choke on a fucking taint, Google. Choke. On. A. Taint.
(Or just implement basic autonomy/open allocation for all engineers. Then we're cool no matter what you pay your execs.)
I know GOOG has been dominating the search market for more than a decade, does it also have the same position in the ad market?