One Reason Staffers Quit Google’s Car Project? The Company Paid Them So Much

One Reason Staffers Quit Google’s Car Project? The Company Paid Them So Much
‘F-you money’ awarded to veteran team members boosted parent Alphabet’s R&D costs, prompting comment from the company’s CFO
By Alistair Barr and Mark Bergen
Feb 13 2017
https://www.bloomberg.com/news/articles/2017-02-13/one-reason-staffers-quit-google-s-car-project-the-company-paid-them-so-much

For the past year, Google’s car project has been a talent sieve, thanks to leadership changes, strategy doubts, new startup dreams and rivals luring self-driving technology experts. Another force pushing people out? Money. A lot of it.

Early staffers had an unusual compensation system that awarded supersized payouts based on the project’s value. By late 2015, the numbers were so big that several veteran members didn’t need the job security anymore, making them more open to other opportunities, according to people familiar with the situation. Two people called it “F-you money.”

In December, the car unit morphed into a standalone business called Waymo, and the system was replaced with a more uniform pay structure that treats all employees the same, according to a person familiar with the situation. Still, the original program got so costly that a top executive at parent Alphabet Inc. highlighted it last year to explain a jump in expenses. A spokeswoman for Alphabet, the holding company that owns Google and “Other Bets” like the autonomous car business, declined to comment.

The payouts contributed to a talent exodus at a time when the company was trying to turn the project into a real business and emerging rivals were recruiting heavily. The episode highlights Alphabet’s difficult transition from a digital advertising giant into a diversified technology company with varied groups of employees requiring different incentives. Other new businesses, including health care unit Verily, use different compensation systems too, but they have yet to generate huge payouts like the car project.

The unorthodox system started in 2010, soon after Google unveiled its first self-driving vehicle. It was constructed to tie employees’ fortunes to the performance of the project, rather than Google’s advertising money machine. In addition to cash salaries, some staffers were given bonuses and equity in the business and these awards were set aside in a special entity. After several years, Google applied a multiplier to the value of the awards and paid some or all of it out. The multiplier was based on periodic valuations of the division, the people said.

The precise metrics that the division was measured by– and caused the bonuses to balloon– are not known. But by 2015, the Google car project had come a long way: Google’s vehicles had logged more than one million autonomous miles; car companies including Toyota Motor Corp. and Tesla Inc. announced their own plans to develop autonomous systems; and analysts predicted the technology would transform the auto industry.

A large multiplier was applied to the compensation packages in late 2015, resulting in multi-million dollar payments in some cases, according to the people familiar with the situation. One member of the team had a multiplier of 16 applied to bonuses and equity amassed over four years, one of the people said. They asked not to be identified talking about private matters.

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