Google said in a regulatory filing on Monday the stock and stock options will be granted on Feb. 2 and will vest over four years.
The magnitude of the award is “unusual” for an executive who is transitioning out of the CEO role — and may even be unusual for sitting CEOs, said David Wise, senior principal at management consulting firm Hay Group. But given Schmidt’s success, “the board clearly wants to retain his guidance for the next four years.”
“It’s a signal to shareholders that he’ll continue to steer the boat,” Wise added.
Schmidt, 55, is being replaced as Google’s CEO by co-founder Larry Page. Both men, along with Google’s other co-founder Sergey Brin, have limited their salaries to $1 for years. But the three are Google’s controlling shareholders and Schmidt’s net worth is about $5.45 billion, according to Forbes magazine.
Page, 37, takes over the CEO role in April. Schmidt summed up seismic shift at Google’s helm in a Twitter post last week that said, “Day-to-day adult supervision no longer needed!”
Schmidt has led Google since 2001, three years before the company went public in August 2004. Since then, Google’s shares have grown more than sixfold, at one point surpassing $700. Google’s market capitalization is now about $196 billion. Though it faces a formidable crop of young new rivals, notably Facebook, Google so far has managed to stay on top of the online advertising food chain, relying mainly on its search prowess but flexing its muscles in other areas too.
Schmidt, Brin and Page had led Google through the past decade as a ruling triumvirate. With the changes, Schmidt will serve an adviser to Page and a liaison for Google’s business partners and government officials, the latter an important role as Google faces growing regulatory scrutiny in the U.S. and Europe.
Page will lead product development and technology strategy and run Google’s day-to-day operations. Brin, meanwhile, will work on strategic projects with an emphasis on new products.
Schmidt held about 9.2 million of Google’s shares as of Dec. 31, 2010, according to a separate filing from last week. This amounts to about 2.9 percent of Google’s outstanding shares and about 9.6 percent of the voting power. He plans to sell about 534,000 Class A shares as part of a pre-arranged trading plan. If he does, he will then hold about 9.1 percent of Google’s voting power, the company said.
Shares of Google slid $3.51 to $608.32 in afternoon trading.