- Page 47-48 describes what would happen to executives' compensation if they leave the organization due to change in ownership (Merger/Acquisition), death, or termination. What are your thoughts on this plan? (Note: a "tranche" is a group of securities or an individual stock award for a given year)
- Page 48 describes the ratio of the CEO's core compensation to the average employee compensation. Do you think this ratio is good or fair for the company? Do you think this ratio is good or fair for society? Why or why not?
1 Corporate 2 Director and Executive Compensation 3 Audit Matters Management and Stockholder Proposals 5 Governance Questions and Answers OPTIONS EXERCISED AND STOCK VESTED IN FISCAL 2020 The following table provides information for the named executive officers regarding stock option exercises during the year ended December 31, 2020, including the number of shares acquired upon exercise and the value realized, before payment of any applicable withholding tax and broker commissions, and GSUs that vested during the same period, before payment of any applicable withholding tax. Option Awards Stock Awards Number of Shares Number of Shares Acquired on Value Realized Acquired on Value Realized Exercise on Exercise Vesting on Vesting Name (9) ($) () ($) Sundar Pichai 2,918 3,595,837 53,670 76,930,480 Ruth M. Porat 19,820 29,103,348 Prabhakar Raghavan 19,644 28,910,858 Philipp Schindler 30,418 44,505,072 Kent Walker 19,820 29,103,348 (1) The value realized on exercise is calculated as the product of (a) the number of shares of our Class A common stock or Class C capital stock as applicable, for which the stock options were exercised and (b) the excess of the closing price of our Class A common stock or Class C capital stock, as applicable, on the NASDAQ Global Select Market on the date of the exercise over the applicable exercise price per share of the stock options (2) The value realized on vesting is calculated as the product of (a) the number of shares of Class C capital stock underlying the GSUs that vested and (b) the closing price of Class C capital stock on the NASDAQ Global Select Market on the day before vesting. POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL We have no agreements with our named executive officers that provide for additional or accelerated compensation upon termination of the executive's employment or a change in control of Alphabet, except as set forth below. In the event of a change in control of Alphabet and, unless our Board of Directors or Leadership Development and Compensation Committee determines otherwise, if the successor corporation does not assume or substitute the equity awards held by our employees, including our named executive officers, all unvested stock options and unvested GSUS will fully vest and the target award for each tranche of Sundar's PSUs will fully vest. Effective December 17, 2019, the Leadership Development and Compensation Committee approved an amendment to Alphabet's form of restricted stock unit agreement under the Amended and Restated 2012 Stock Plan for future grants, such that, similar to GSUs granted to all other Alphabet employees, GSUS granted to directors and named executive officers of Alphabet will immediately vest in full upon termination of service on the Board, or of employment, by reason of death. In respect to Sundar's PSUs: Upon a termination of employment by reason of death (i) prior to the start of the performance period of a tranche or during the performance period of a tranche, the target number of PSUs for such tranche will immediately vest in full as of the date of such termination of employment and (i) following the end of the performance period of a tranche but prior to the determination date with respect to such tranche, the number of PSUs earned based on actual performance will immediately vest as of the determination date. Upon a termination of employment by Alphabet without cause (as defined in the PSU agreement) prior to the determination date for a tranche but after the start of the performance period with respect to such tranche, the number of PSUs earned based on actual performance will be prorated based on the number of calendar days in the performance period Sundar was performing services and the pro rata portion will vest as of the determination date. The table on page 48 of this proxy statement shows our estimates of the value each of our named executive officers would have received if their unvested GSUS (and in Sundar's case, PSUs) had become fully vested as a result of termination of employment by reason of a change in control, death, or in the case of Sundar, by Alphabet without cause (as defined in the PSU Agreement) occurring on December 31, 2020. All stock options held by our named executive officers as of December 31, 2020 are fully vested. ALPHABET 2021 PROXY STATEMENT 47 1 2 Director and 3 4 Management 5 Questions and Governance Matters and Stockholder Proposals Answers Compensation Estimated Benefit of Estimated Benefit of Estimated Benefit of Equity Acceleration Equity Acceleration Upon Equity Acceleration Upon Termination Name Change in Control ($) Upon Death (12) without Cause ($) Sundar Pichai 228,341,791 228,341,791 50,370,054 Ruth M. Porat 67,372,049 48,973,805 Prabhakar Raghavan 69,907,020 53,234,378 Philipp Schindler 95,875,137 63,878,800 Kent Walker 67,372,049 48,973,805 (1) The estimated benefit amount of equity acceleration was calculated by multiplying the number of unvested GSUS, and in Sundar's case, the target number of PSUs, by the closing price of Class C capital stock on December 31, 2020, which was $1,751.88 per share. (2) The amendment of Alphabet's form of restricted stock unit agreement under the Amended and Restated 2012 Stock Plan, adopted by the Leadership Development and Compensation Committee on December 17, 2019 for future grants, that provides for equity acceleration upon death is applicable to the equity awards granted after the adoption date. (3) The estimated benefit amount of equity acceleration reflects prorated achievement of market-based goals at the target level for each tranche of Sundar's 2019 PSU award. As of December 31, 2020, one-half of the first performance period tranche (January 2020 to December 2021) has been completed and one-third of the second performance period tranche (January 2020 to December 2022) has been completed. The value shown was calculated by multiplying the target number of PSUs for the first performance period tranche and the target number of PSUs for the second performance period tranche by the closing price of our Class C capital stock on December 31, 2020, which was $1,751.88 per share. ALPHABET CEO PAY RATIO The following table sets forth the ratio of Alphabet Chief Executive Officer Sundar's total compensation to that of Alphabet's median employee for the year ended December 31, 2020. Chief Executive Officer total compensation in 2020 $7,425,547 Median Employee total compensation in 2020 $273,493 Ratio of Chief Executive Officer to Median Employee total compensation 27:1 To determine the median employee compensation, we analyzed all of Alphabet's employees, excluding Alphabet's Chief Executive Officer, as of December 31, 2020. We annualized wages and salaries for employees that were not employed for the full year. We used base salary and actual bonus as the consistently applied compensation metric to determine the median employee. If this resulted in more than one individual at the median level, we assessed the grant date fair value of standard equity awards for these individuals and selected the employee with the median award value. After identifying the median employee, we calculated annual total compensation for the median employee according to the methodology used to report the annual compensation of our named executive officers in the Summary Compensation Table on page 44. 48 ALPHABET 2021 PROXY STATEMENT 1 Corporate 2 Director and Executive Compensation 3 Audit Matters Management and Stockholder Proposals 5 Governance Questions and Answers OPTIONS EXERCISED AND STOCK VESTED IN FISCAL 2020 The following table provides information for the named executive officers regarding stock option exercises during the year ended December 31, 2020, including the number of shares acquired upon exercise and the value realized, before payment of any applicable withholding tax and broker commissions, and GSUs that vested during the same period, before payment of any applicable withholding tax. Option Awards Stock Awards Number of Shares Number of Shares Acquired on Value Realized Acquired on Value Realized Exercise on Exercise Vesting on Vesting Name (9) ($) () ($) Sundar Pichai 2,918 3,595,837 53,670 76,930,480 Ruth M. Porat 19,820 29,103,348 Prabhakar Raghavan 19,644 28,910,858 Philipp Schindler 30,418 44,505,072 Kent Walker 19,820 29,103,348 (1) The value realized on exercise is calculated as the product of (a) the number of shares of our Class A common stock or Class C capital stock as applicable, for which the stock options were exercised and (b) the excess of the closing price of our Class A common stock or Class C capital stock, as applicable, on the NASDAQ Global Select Market on the date of the exercise over the applicable exercise price per share of the stock options (2) The value realized on vesting is calculated as the product of (a) the number of shares of Class C capital stock underlying the GSUs that vested and (b) the closing price of Class C capital stock on the NASDAQ Global Select Market on the day before vesting. POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL We have no agreements with our named executive officers that provide for additional or accelerated compensation upon termination of the executive's employment or a change in control of Alphabet, except as set forth below. In the event of a change in control of Alphabet and, unless our Board of Directors or Leadership Development and Compensation Committee determines otherwise, if the successor corporation does not assume or substitute the equity awards held by our employees, including our named executive officers, all unvested stock options and unvested GSUS will fully vest and the target award for each tranche of Sundar's PSUs will fully vest. Effective December 17, 2019, the Leadership Development and Compensation Committee approved an amendment to Alphabet's form of restricted stock unit agreement under the Amended and Restated 2012 Stock Plan for future grants, such that, similar to GSUs granted to all other Alphabet employees, GSUS granted to directors and named executive officers of Alphabet will immediately vest in full upon termination of service on the Board, or of employment, by reason of death. In respect to Sundar's PSUs: Upon a termination of employment by reason of death (i) prior to the start of the performance period of a tranche or during the performance period of a tranche, the target number of PSUs for such tranche will immediately vest in full as of the date of such termination of employment and (i) following the end of the performance period of a tranche but prior to the determination date with respect to such tranche, the number of PSUs earned based on actual performance will immediately vest as of the determination date. Upon a termination of employment by Alphabet without cause (as defined in the PSU agreement) prior to the determination date for a tranche but after the start of the performance period with respect to such tranche, the number of PSUs earned based on actual performance will be prorated based on the number of calendar days in the performance period Sundar was performing services and the pro rata portion will vest as of the determination date. The table on page 48 of this proxy statement shows our estimates of the value each of our named executive officers would have received if their unvested GSUS (and in Sundar's case, PSUs) had become fully vested as a result of termination of employment by reason of a change in control, death, or in the case of Sundar, by Alphabet without cause (as defined in the PSU Agreement) occurring on December 31, 2020. All stock options held by our named executive officers as of December 31, 2020 are fully vested. ALPHABET 2021 PROXY STATEMENT 47 1 2 Director and 3 4 Management 5 Questions and Governance Matters and Stockholder Proposals Answers Compensation Estimated Benefit of Estimated Benefit of Estimated Benefit of Equity Acceleration Equity Acceleration Upon Equity Acceleration Upon Termination Name Change in Control ($) Upon Death (12) without Cause ($) Sundar Pichai 228,341,791 228,341,791 50,370,054 Ruth M. Porat 67,372,049 48,973,805 Prabhakar Raghavan 69,907,020 53,234,378 Philipp Schindler 95,875,137 63,878,800 Kent Walker 67,372,049 48,973,805 (1) The estimated benefit amount of equity acceleration was calculated by multiplying the number of unvested GSUS, and in Sundar's case, the target number of PSUs, by the closing price of Class C capital stock on December 31, 2020, which was $1,751.88 per share. (2) The amendment of Alphabet's form of restricted stock unit agreement under the Amended and Restated 2012 Stock Plan, adopted by the Leadership Development and Compensation Committee on December 17, 2019 for future grants, that provides for equity acceleration upon death is applicable to the equity awards granted after the adoption date. (3) The estimated benefit amount of equity acceleration reflects prorated achievement of market-based goals at the target level for each tranche of Sundar's 2019 PSU award. As of December 31, 2020, one-half of the first performance period tranche (January 2020 to December 2021) has been completed and one-third of the second performance period tranche (January 2020 to December 2022) has been completed. The value shown was calculated by multiplying the target number of PSUs for the first performance period tranche and the target number of PSUs for the second performance period tranche by the closing price of our Class C capital stock on December 31, 2020, which was $1,751.88 per share. ALPHABET CEO PAY RATIO The following table sets forth the ratio of Alphabet Chief Executive Officer Sundar's total compensation to that of Alphabet's median employee for the year ended December 31, 2020. Chief Executive Officer total compensation in 2020 $7,425,547 Median Employee total compensation in 2020 $273,493 Ratio of Chief Executive Officer to Median Employee total compensation 27:1 To determine the median employee compensation, we analyzed all of Alphabet's employees, excluding Alphabet's Chief Executive Officer, as of December 31, 2020. We annualized wages and salaries for employees that were not employed for the full year. We used base salary and actual bonus as the consistently applied compensation metric to determine the median employee. If this resulted in more than one individual at the median level, we assessed the grant date fair value of standard equity awards for these individuals and selected the employee with the median award value. After identifying the median employee, we calculated annual total compensation for the median employee according to the methodology used to report the annual compensation of our named executive officers in the Summary Compensation Table on page 44. 48 ALPHABET 2021 PROXY STATEMENT
