Ruth Porat is worth $70 million. And that’s not likely a paycheck that her former employer Morgan Stanley could match. On Tuesday, she announced she was moving to Google. And Silicon Valley takes another top female from Wall Street.
Richard Waters had this story for The Financial Times:
Ruth Porat, the outgoing chief financial officer of Morgan Stanley, is set to receive a cash and stock award worth more than $70m in the first year after she swaps coasts to become the top finance official at Google in May.
The high award is set to shine a spotlight on Silicon Valley pay levels that have started to soar in many cases above those on Wall Street, which traditionally has provided the most generous packages for executives. She will only get the full benefit from the stock awards if she stays at least four years.
The 58-year-old Ms Porat made around $10m a year in the four years she was Morgan Stanley’s chief financial officer, less than half the amount paid to outgoing Google finance chief Patrick Pichette over the same period.
Her new package includes a cash signing-on bonus of $5m and an immediate stock grant of $25m — though that was still much less than the one-off stock award worth $61m that was handed to former Goldman Sachs banker Anthony Noto when be became the finance chief at Twitter last year.
Conor Dougherty wrote for The New York Times that Porat wasn’t likely to need her $7500 moving bonus:
Ms. Porat, who will replace Patrick Pichette, who is retiring to relax and travel , also gets a $7,500 moving allowance, though it seems unlikely she will need it.
Google used the same regulatory filing to announce that it had changed the way it will pay senior vice presidents. The company said that starting next year, it will eliminate cash bonuses and replace them with stock grants every two years.
A Google spokeswoman declined to comment, but the company presumably made the change to align senior officers’ paychecks with the interest of its increasingly impatient shareholders.
As Google gets close to its 11th anniversary as a public company, the company is for the first time facing questions about its growth and stock price.
Bloomberg’s Michael J. Moore and Brian Womack reported that her pay far outpaced her predecessor:
Pichette’s compensation at Google fell to $5.2 million in 2013 from $38.7 million. The company typically gives equity awards to executive officers in even-numbered years.
Google on Thursday said it would pay Pichette pro-rated outstanding equity grants that were set to vest in 2016 and 2018, based on the time he would have spent as finance chief. That will ensure “that he continues performing in the role until such time as Google determines that there has been a smooth transition to the new CFO,” the company said.
Twitter Inc. CFO Anthony Noto received a one-time stock award of 1.5 million restricted shares vesting over four years, valued at about $64 million at prices in early July, when his appointment was announced. Noto, who also had experience on Wall Street, received a one-time option grant to buy 500,000 shares, as well. Apple’s Luca Maestri, who was promoted to finance chief last year, received compensation valued at $14 million, including a salary of $717,211 and $11.3 million in stock.
Other roles at Google invite larger pay packages. Omid Kordestani, Google’s 11th employee, was awarded $123 million in restricted stock after he replaced Nikesh Arora as chief business officer last year.
The New York Times story on Tuesday by Nathaniel Popper and Conor Dougherty detailed some of the recent cross country moves:
The economic strength of the technology industry adds to the lifestyle differences — including a relaxed dress code, better weather and a more freewheeling culture — that have long attracted young employees to start-ups. Compare that with Wall Street, where new legislation has increased the emphasis on hierarchical decision-making and standardized processes.
“Just the thought of walking into a tall building in a suit or high heels and going to meetings where you’re discussing a regulated industry where it’s increasingly difficult to innovate — most of the people I talk to don’t find that prospect appealing,” said Martha Josephson, a partner in the Palo Alto, Calif., office of Egon Zehnder, an executive recruiting firm.
As the movement between industries has taken hold, it has often built on itself. When Marissa Mayer became Yahoo’s chief executive in 2012, she hired Jacqueline D. Reses, a former Goldman banker, as the company’s chief development officer. Ms. Reses’s job, in essence, was to help Yahoo recruit new talent and to find promising companies to buy and team up with.
She has led Yahoo’s dozens of acquisitions, including the $1.1 billion purchase of Tumblr and the $640 million purchase of Brightroll. Naturally, she brought in many of her own to help.
“I have hired people out of Wall Street, primarily because it was a peer group that I was very familiar with,” Ms. Reses said.
The most noticeable departures from Wall Street have been the high-level banking executives like Ms. Porat and Mr. Noto, who have taken their financial expertise to companies that were started by programmers.
But the more troubling trend for Wall Street banks is the lower-ranking programmers who are opting to head west at a time when banks are more dependent than ever on software and technology.
And that last point, really is the crux of it all. As more top executives move to California, they also take their best people, who recruit the next level and so on. While the brain drain isn’t staggering at this point, it is making some Wall Street firms nervous. Because if Silicon Valley becomes the land of equal opportunity, who wants to put up with the boys club of a bank to earn your multi-million salary.
