Congratulations! You've successfully got an attractive offer from Google. Now onto the next challenge: understanding the compensation structure and how it will increase over time. Here's a deep dive into Google's compensation structure and how it rewards top performers.
Google's compensation structure consists of three key components:
- Salary
- Bonus
- Equity
These components are the foundation of Google's total compensation package and form the pillars on which compensation can improve over time. Google operates under a pay for performance philosophy that rewards top performers. This means top performers are eligible for merit increases, which are usually awarded through equity refresh grants and cash bonuses at year end.
Salary
Salary is determined by several factors including:
- External factors: Salary varies by role, level and location, and is dependent on the cost of labor in a given geographic region.
- Pay targets: Projected amount of pay for top performers determined by job, location and tenure.
- Your specific compensation plan: There are two types of compensation plans: company bonus plan and sales bonus plan. The respective plans have variable and proportional differences in how base and bonus is paid.
Salary Increases
There are two types of salary increases at Google. You may receive a salary increase if your role changes or if you receive a promotion.
- Promo salary increases: If promoted, pay increases take effect May 1st for those promoted mid-year and November 1st for those promoted at the end of the year.
- Merit salary increases: Managers award merit increases in Q4, and the pay increase is reflected in January 1 of the following year.
Bonus
Bonus is meant to reward exceptional performers measured by their individual contributions for the past cycle (either yearly or quarterly). Bonus is not guaranteed and may vary year to year. TVCs (temporary workers, vendors and contractors) are not eligible for bonuses.
If you are on the company bonus plan (you will be told if you are), your bonus will be based on your performance for the past year. Bonus is awarded at your manager's discretion, and you must be employed by Google on December 31st to receive your bonus. Bonuses are prorated if you were not employed for the full calendar year.
Similarly, the sales bonus plan rewards performance for the past quarter. Performance is assessed according to company and team goals, and determines how much bonus you will receive. You must be employed on the last day of the performance period to receive bonus for the quarter.
Equity
Google equity awards are granted in the form of restricted stock units (GSUs). As a Noogler (new Google employee), you typically receive your equity grant the first Wednesday after the first month in which you begin work.
Your offer letter will give a USD denominated value for the equity award. The number of GSUs you receive is determined by the following equation:
Intended value ÷ Conversion price ≈ Number of GSUs
- Intended value: USD denominated value
- Conversion price: Average closing price of Alphabet Class C capital Stock in the month prior to the grant date
- Final number of GSUs is rounded up to the nearest full GSU value
Example of GSU Grant
| Intended Value | Conversion Price | # of GSUs Granted | ||
|---|---|---|---|---|
| $40,000 | ÷ | 400 | = | 100 |
Use the number of GSUs granted in the table above to determine the vested value.
| # of GSUs Granted | Amount Vesting | # of GSUs Vesting | GOOG Share Price at Vest | Vested Value | ||||
|---|---|---|---|---|---|---|---|---|
| 100 GSUs | x | 25% | = | 25 GSUs | x | $500 | = | $12,500 |
Vesting Schedule
The vesting schedule is dependent on the number of shares you are awarded. Since the number of GSUs cannot be determined until your second month of work, it is impossible to say how frequently your GSUs will vest at the time you accept the offer.
| # of GSUs | Noogler Vesting Schedule |
|---|---|
| <32 | Annually |
| 32-63 | Semi-annually |
| 64-159 | Quarterly |
| 160+ | Monthly |
Equity Refresher Grant
Most Googlers are eligible for refresher grants. Managers plan refresher grants at the end of each year during compensation planning cycles. An algorithm determines the recommended refresh amount, and managers use their discretion to adjust that amount either up or down. Nooglers are eligible for refresher grants at the end of their first year, but they rarely receive them as they are still ramping up and learning their role. Still, you are eligible, and the better you perform, the more likely you are to receive one.
Overall, Google rewards top performers with merit pay increases, promotions and refresher equity grants. The better you perform, the more likely you are to see your effort rewarded in your paycheck. Good luck!
Companies vary in their vesting schedules and occasionally update them (Lyft recently did). There's a lot we covered here. If you need more help, we help people negotiate their Google offers all the time!