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At $280M, Alphabet's Sundar Pichai is 2019's highest-paid US info tech CEO

When Google LLC co-founders Larry Page and Sergey Brin stepped down as the heads of Alphabet Inc. in 2019, they kept their $1 annual salaries. But their successor, Sundar Pichai, got a slightly larger compensation package.

Pichai was the U.S. information technology sector's highest-paid CEO last year, bringing in $280.6 million in total compensation for 2019, according to an analysis by S&P Global Market Intelligence. By comparison, the sector's next-highest-paid CEO was Intel Corp.'s Robert Swan, who earned $66.9 million.

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Pichai, who has been the CEO of Google since 2015 and who took the reins at Alphabet in December 2019, received the bulk of his compensation from stock awards that were announced in tandem with his promotion. At the time, Alphabet said Pichai was granted two forms of stock-based awards — restricted stock units, or a "time-based equity" award, and performance stock units, which are tied to the company's overall performance. In total, the stock package was valued at $276.6 million.

The restricted stock award was targeted to total $120 million, along with a transitional award of $30 million in the form of additional restricted stock units. On top of that, Pichai also was granted two tranches of performance stock units that each have a target value of $45 million. The first tranche will vest, depending on Alphabet's stock performance relative to the S&P 100, over the two-year performance period between January 2020 and December 2021. The second tranche will vest, or not, depending on Alphabet's performance over the three-year period ending December 2022.

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The search giant said in its proxy statement that its executives do not receive cash bonuses and instead receive all variable pay through equity awards so as to reinforce management's focus on long-term stockholder value.

Shares in Alphabet were up almost 12.5% year-to-date as of market close Aug. 12, as compared to a 4.6% increase for the S&P 500. The company is among the five mega-cap tech stocks leading the index — along with Facebook Inc., Amazon.com Inc., Apple Inc. and Microsoft Corp. — this year amid the coronavirus pandemic.

As for Intel's Swan, the bulk of the CEO's $66.9 million compensation package, $61.7 million, came from stock awards. Like Pichai, Swan's package was up significantly year over year, reflecting stock awards he received as part of a January 2019 promotion, when he was raised from CFO and interim CEO.

Intel has struggled in recent years amid various business challenges and growing competition. Most recently, Swan told analysts that the company was 12 months behind its internal goals for production of the next-generation 7-nanometer chips that would bring it back up to parity with competitors including Advanced Micro Devices Inc. and NVIDIA Corp., which design chips but outsource their production to Taiwan Semiconductor Manufacturing Co. Ltd.

Intel executives said during the call that they did not know for sure what was causing the manufacturing problems and that the company may have to hire a third-party foundry to help. The news sent Intel shares tumbling and subsequently led to a management shakeup, with Intel's chief engineering officer exiting the company.

Lisa Su, CEO of Intel-rival AMD, ranked as the third-highest-paid CEO in the U.S. information technology sector, earning a total compensation package of $58.5 million, according to S&P Global Market Intelligence data.

Other well-known CEOs to make the list include Microsoft's Satya Nadella, Uber Technologies Inc.'s Dara Khosrowshahi and Adobe Inc.'s Shantanu Narayen.

Pinterest Inc. CEO Benjamin Silbermann, who took in a total compensation package of $46.2 million, saw the highest year-over-year increase on a percentage basis. Silbermann received restricted stock unit awards with a grant date fair value of $45.8 million, which vest over five years. These units were a special, one-time award ahead of Pinterest's 2019 initial public offering.

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