For over a year now Google‘s driverless car project, Waymo, has lost many of its executives due to a peculiar reason: they were being paid too much. Bloomberg reports that a flawed compensation system has led the company’s veterans to receive huge pay checks, giving them enough financial security to leave the company for more adventurous roles. According to sources close to the company, some people even called it “F-you money.”
Google set this compensation system in place soon after the launch of its first driverless vehicle, in 2010. The reward system included cash salaries, bonuses and equity in the company. It was designed to be proportional to the results of the project rather than to Google’s traditional advertisement returns. After several years, the firm applied a multiplier, related to periodic valuations, to the value of the rewards and paid some or all of it out.
Although the multiplier system initially rewarded very important progress justly, the payouts continued to balloon to unprecedented levels even after the project’s results slowed down. Other factors added to the growing unease surrounding Waymo project such as rising R&D costs, leadership changes, strategy doubts, and new attractive rivals. These all contributed to the sudden brain drain in the firm, with some of these ex-Googlers even setting up their own startups as direct competitors.
Ruth Porat, Chief Financial Officer at Google’s holding company Alphabet Inc, stated that the company was working on fixing this talent leak with new, more adequate and tailored incentive systems. Regarding to this topic, she commented: “It is about getting more ambitious things done. We’re doing that in a framework to ensure we are disciplined with our resources, and this was just calling out a milestone established some time ago.”