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Case Summary
When Google went public in 1994, its stock price was around $100/share and then rose rapidly, peaking at $747 in November 2007. (During 2018 [now as Alphabet], the stock price was over $1,000). As a result, Google is now subjected to comments such as “Google isn’t the hot place to work” and has “become the safe place to work,” (per Robert Greene, who recruits engineers for start-ups such as Facebook). This was because Google announced that it was giving a 10% across the board increase in salary.
“Analysts say Google is facing what all Silicon Valley companies struggle with when they graduate from startup status and into the realm of Big Tech.”
Also, Google engaged itself in repricing their stock options. A majority of employees took advantage of the opportunity to replace their existing options with new options.
Discussion of Case Questions
1. What is Google’s pay level? How do you define and measure its pay level? How well is it captured by salary alone?
2. Does your answer to the above question depend on what point in time it is answered? For example, wh

at was Google’s pay level the day before it repriced employee stock options? What was Google’s pay level the day after it repriced employee stock options? And now?
3. Why did Google reprice its stock options and also give a 10 percent salary increase (in an era when 2 to 3 percent annual salary increase budgets are the norm)? Is it because its business strategy and/or product life cycle changed? Is it because it was concerned that employees’ perceived value of compensation did not match what Google was spending?
4. Do you think Google has made the right choices in changing its compensation strategy? How much do these changes cost? How do these costs compare to Google’s total costs and operating income? Are these increased compensation costs likely to be a good investment? In other words, will they pay for themselves (and more)? Explain.
5. Will Google’s pay strategy work “forever”? Consider the evolution of Microsoft’s pay strategy as its growth slackened. Should Google prepare for a similar future? If so, when and what sort of actions should they take to prepare?