Shareholders urged to protest Google pay
NEW YORK — Google shareholders were urged to give a big thumbs down to three of the company's directors at the annual meeting Wednesday in protest of "mega grants" provided to certain executives, including Executive Chairman Eric Schmidt.
In a report to shareholders, proxy advisory firm ISS said investors should "withhold" votes from the board's compensation committee, which is responsible for setting the executives' pay. To "withhold" a vote is to abstain from voting "for" a particular person or issue.
The three directors on that committee are John Doerr of venture capital firm Kleiner, Perkins, Caufield & Byers; former Intel CEO Paul Otellini; and Kavitark Ram Shiram of venture firm Sherpalo Ventures.
At issue is the $100 million in restricted stock grants the board gave to Schmidt last year, as well as $123 million in stock grants to Omid Kordestani, who joined as Google's new chief business officer in August.
ISS said the board failed to tie the stock grants to the executives' job performance. Schmidt's $100 million in stock, for example, is set to vest on a quarterly basis over four years, regardless of his contributions to the company's performance, ISS said.
Schmidt also received a $6 million bonus last year, which ISS deemed "discretionary" or lacking in visible ties to performance.
"The magnitude of total pay provided to certain executives, paired with a lack of performance criteria and compelling rationale, raises significant concerns," ISS said.
Google spokeswoman Winnie King declined to comment. The tech giant will hold its annual shareholder meeting at its Mountain View, Calif., headquarters.
ISS and Glass Lewis, another influential proxy advisory firm, can sway the outcome of corporate elections and other issues put to shareholders by 30% in some cases.
The two firms recently created problems for JP Morgan, for example, when they recommended investors vote against the bank's executive pay packages amid concerns over a lack of pay for performance. The proposal passed, but by 61.4%, below an average vote of 90% for such proposals.
Glass Lewis advised shareholders to withhold votes from two Google directors, based on concerns over their financial ties to the email provider.
Glass Lewis pointed to director John Hennessy because of $2.3 million the company recently donated to Stanford University, where Hennessy is president. Glass Lewis took issue with Doerr because his firm, KPCB, owned more than 10% of the outstanding shares in Nest Labs when it was acquired by Google for $3.2 billion in 2014.
"We view such relationships as potentially creating conflicts for directors, as they may be forced to weigh their own interests in relation to shareholder interests when making board decisions," Glass Lewis said in its report.