The most prominent institutional shareholders are mutual funds BlackRock and The Vanguard Group, with 2.7% and 3.1%, respectively. Larry Page and Sergey Brin together have 51% of the voting power. Other individual shareholders comprise John Doerr (1.5%), venture capitalist and early investor in Google, and CEO, Sundar Pichai. Former Google CEO Eric Schmidt has 4.2% voting power.
Google’s Class A, Class B, and Class C stocks: Not all shares are born equal
When a company decides to issue equity in the form of common stocks, it can do so in several types depending on the limitations that the owners of the company want to give to voting powers.
Google’s Class B Common Stocks
In Google’s case, each Class B common stock holder is entitled to ten votes per share. Class B common stockholders have ten votes for each director nominee and ten for each proposal to be voted on.
We can define Class B stocks as common shares on steroids.
They empower those who own them to keep control of the company.
Page and Brin, Google’s founders, wanted to keep as much power in the company’s future decisions as they leveraged on Class B Common Stocks to have a higher weight on the company’s decisions.
Google’s Class A Common Stocks
Google’s Class A common stocks are entitled to vote.
Each share of Class A common stock is entitled to one vote for each director nominee and one vote for each of the proposals to be voted on.
Google’s Class C Common Stocks
Holders of Class C capital stock have no voting power as to any items of business that will be voted on at the Annual Meeting.
Those do confer ownership in the company and the right to be paid based on dividends and the company’s stock appreciation.
This list is worth looking at, like those are the people in charge of several “corporate functions.”
Board of directors
In 2022, the Board of Directors was composed of ten directors with the following committees:
1. an Audit Committee, whose primary function is to oversee accounting and financial reporting processes
2. a Leadership Development and Compensation Committee, which aims to oversee the compensation programs.
3. a Nominating and Corporate Governance Committee, the main purpose is to assist the Board of Directors in identifying individuals qualified to become members of the Board of Directors
4. an Executive Committee serves as an administrative committee of the Board of Directors to act upon and facilitate the consideration by senior management and the Board of Directors of certain high-level business and strategic matters.
From time to time, the Board of Directors may also establish ad hoc committees to address particular matters.
And they get reviewed each year based on various elements.
What is the compensation for those directors?
While it might change, we can look at compensation for 2022:
As a multi-billion tech giant, Google’s compensations are very competitive and based on the following elements:
the base salary that provides a steady income to employees.
equity awards, primarily based on the performance of each. an employee that will receive those awards.
In assessing the compensation part, Google took into account (at least for 2022) the following “peers companies:”
Amazon.com, HP, Oracle Corporation, Apple, Intel Corporation, Cisco Systems, International Business Machines (IBM), The Walt Disney Company, Microsoft, and a few more.
We can break down all the compensations in base salary, bonuses, stock awards, option awards, non-equity incentives plans, and non-qualified deferred compensation earnings.
In terms of salary, both Page and Brin get a symbolic $1.
Current CEO Sundar Pichai earned $2 million of base salary in 2021.
To notice Pichai received over $270 million in stock awards in 2019.
In 2021 the total compensation was $6.3 million.
What’s the difference between Stock awards and Option awards
When it comes to stock awards, they usually can get “vested” (exercised or monetized) at a certain date.
For instance, we can see how in 2021 Sundar Pichai “vested” millions of dollars of stock awards:
Sundar Pichai vested over $79 million worth of Google’s stocks.
When it comes to option awards – as a reference below – the executive or employee that receives it will have a fixed price to buy the stock at a specified date:
For instance, you notice the so-called exercise price in this table that shows the unvested (not yet exercised) stock options held by Schmidt and Pichai by December 2017.
For instance, in 2021, Eric Schmidt can purchase 181,840 Google stocks at $306.61.
As defined in the proxy statement before Google’s IPO, percentage ownership is based on 162,550,115 shares of Class A common stock and 114,732,822 shares of Class B common stock outstanding on March 28, 2005.
At the time, just like today, Brin and Page seemed obsessed with control and ownership.
In fact, at the time, both of them held over 55.6% of the voting power.
Back then, the other individual investors with a consistent stake in the company were – at the time – CEO Erick Schmidt, venture capitalist John Doerr, venture capitalist Michael Moritz and Omid Kordestani, who at the time was in charge of Business Development and Sales and one of those who helped Google scale up (he closed the AOL deal).
As of January 31, 2020, there were 300,047,170 shares of the registrant’s Class A common stock outstanding, and 46,407,491 shares of the registrant’s Class B common stock outstanding.
The company’s control is still in the hands of the two co-founders, Page and Brin.
If we look at the individuals owning the company, we have Larr Page and Sergey Brin, which together have 51% of the voting power.
Other substantial private investors comprise John Doerr (read OKR), venture capitalist and early investor in Google, and Sundar Pichai, the current company’s CEO.
The most prominent institutional shareholders (those with more than 5% of Google’s – now called Alphabet – share) are BlackRock, Fidelity (entities affiliated with it), and the Vanguard Group.
Who are Google’s top individual investors and owners?
Larry Page
Founder of Google together with Sergey Brin, Page was the inventor of the PageRank algorithm that made Google the success we know today. Director Since 1998 Larry Page, Chief Executive Officer of Alphabet. He has been a member of the Board of Directors since its inception in September 1998.
Sergey Brin
Founder of Google together with Larry Page. Director Since 1998 Sergey Brin, President of Alphabet, has served as a member of Google Board of Directors since its inception in September 1998.
John Doerr
One of the venture capitalist being – almost – since the beginning, John Doerr was director Since 1999 and has served as a member of Google Board of Directors since May 1999. John Doerr has been a General Partner of Kleiner Perkins Caufield & Byers, a venture capital firm, since August 1980.
Sundar Pichai
Newly appointed CEO – in 2017 – he has served as a member of Google Board of Directors 2017. He served as Google’s Senior Vice President of Products from October 2014 to October 2015.
And as Google’s Senior Vice President of Android, Chrome, and Apps from March 2013 to October 2014. Since joining Google in April 2004, Sundar Pichai has held various positions, including Google’s Senior Vice President, Chrome and Apps; Senior Vice President, Chrome; and Vice President, Product Management.
Before joining Google, Sundar worked in engineering and productmanagement at Applied Materials, Inc., a semiconductor company, and in management consulting at McKinsey & Company, a management consulting firm.
Key takeaway
Over the years, while the ownership of Google has slightly changed, one thing has remained constant, control and ownership by its founders. Brin and Page still represent the major individual shareholders.
Also, as Google issued several common stocks, Brin and Page are the ones who – with their Class B common stocks – preserved their control over the company.
Even when, back in the 2000s, a “grown-up” CEO, Erick Schmidt, was brought in, Brin and Page still had more than 50% of the voting power. The company has adopted several collective decision-making systems over the years.
Google (now Alphabet) primarily makes money through advertising. The Google search engine, while free, is monetized with paid advertising. In 2021 Google’s advertising generated over $209 billion (beyond Google Search, which comprises YouTube Ads and the Network Members Sites) compared to $257 billion in net sales. Advertising represented over 81% of net sales, followed by Google Cloud ($19 billion) and Google’s other revenue streams (Google Play, Pixel phones, and YouTube Premium).
A hidden revenuebusiness model is a pattern for revenue generation that keeps users out of the equation, so they don’t pay for the service or product offered. For instance, Google’s users don’t pay for the search engine. Instead, the revenue streams come from advertising money spent by businesses bidding on keywords.
Of Google’s (Alphabet) over $257 billion revenues for 2021, Google also generated $753 million from a group of startup bets, which Google considers potential moonshots (companies that might open up new industries). Those Google’s bets also generated a loss for the company of over $5.2 billion. In short, Google is using the money generated by search and betting it on other innovative industries.
Google (Alphabet) has a cross-functional (team-based) organizational structure known as a matrix structure with some degree of flatness. Over the years, as the company scaled and it became a tech giant, its organizational structure is morphing more into a centralized organization.
Google is an attention merchant that – in 2021 – generated $209 billion (over 81% of revenue) from ads (Google Search, YouTube Ads, and Network sites), followed by Google Play, Pixel phones, YouTube Premium (a $28 billion segment), and Google Cloud ($19 billion). Over $31.5 billion went toward R&D (12.3% of its revenues).
YouTube was acquired for almost $1.7 billion in 2006 by Google. It makes money through advertising and subscription revenues. YouTube advertising network is part of Google Ads, generating more than $28B in revenue by 2021. YouTube also makes money with its paid memberships and premium content.
The traffic acquisition cost represents the expenses incurred by an internet company, like Google, to gain qualified traffic – on its pages – for monetization. Over the years, Google has been able to reduce its traffic acquisition costs and, in any case, keep it stable. In 2021 Google spent 21.75% of its total advertising revenues (over $45.56 billion) to guarantee its traffic on several desktop and mobile devices across the web.
The most prominent institutional shareholders are mutual funds BlackRock and The Vanguard Group, with 2.7% and 3.1%, respectively. Larry Page and Sergey Brin together have 51% of the voting power. Other individual shareholders comprise John Doerr (1.5%), venture capitalist and early investor in Google, and CEO, Sundar Pichai. Former Google CEO Eric Schmidt has 4.2% voting power.
Mark Zuckerberg is the largest shareholder of the company. Zuckerberg retains ownership and control of the company. Like Google, Facebook has issued two common stocks, Class A and Class B. The holders of Class B common stocks are entitled to ten votes per share, and holders of our Class A common stocks are entitled to one vote per share. Mark Zuckerberg has a voting power of 56.9%; he’s the main decision-maker.
As of 2021, major Apple shareholders comprised Warren Buffet’s Berkshire Hathaway with 5.56% of the company’s stock. Followed by other individual shareholders like Tim Cook, CEO of Apple with over 3.3 million shares, Artur Levinson, chairman of Apple, with over 4.5 million shares, and others.
With 64,588,418 shares, Jeff Bezos is the major individual investor. Owning 12.7% of the company. Other top individual investors comprise Amazon’s CEO Andy Jessy, with 94,729 shares. Top institutional investors comprise mutual funds like The Vanguard Group (6.6% ownership) and BlackRock (5.7% ownership).
Major shareholders comprise co-founder Bill Gates, who stepped down from the company’s board in 2020, which is why these shares are no longer publicly reported. In 2019, Gates still owned a stake of 103 million stocks, which accounted for 1.34% of the company’s ownership (worth over $23 billion in September 2022). Other individual shareholders comprise Satya Nadella, the company’s CEO, Brad Smith (former president), Jean-Philippe Courtois (EVP), and Amy Hood (former CFO).
By 2022, most of Tesla’s shares are still owned by Elon Musk, among the company’s co-founders and the CEO. Elon Musk is the top individual investor, with a 23.5% stake in the company, equivalent to over 244 million shares. Musk is followed by Lawrence Ellison (founder of Oracle), with a 1.5% company stake. Ellison also sits on Tesla’s board. And Antonio Gracias, among the company’s first investors, has over 1.6 million shares. Other institutional investors and mutual funds like The Vanguard Group (6%), Blackrock (5.1%), and Capital Ventures International also have a good chunk of the company’s stocks.
PayPal was first founded in 1998; it was called Confinity (among its founders was Peter Thiel); later, it merged with X.com, its major competitor, founded by Elon Musk (which would become known for other companies like Tesla and SpaceX). From this merger, PayPal was born. In 2002, PayPal was bought by eBay for $1.5 billion. eBay spun off PayPal in 2015, which would be listed as an independent entity. Today PayPal owns brands like Braintree, Venmo, Xoom, and iZettle.
Netflix’s largest individual shareholder is Reed Hastings, co-founder, and CEO of the company, with a 1.7% stake, valued at over $1.8 billion in 2022. Netflix runs a subscription-based business model that generated $29.6 billion in revenues, and it had over 221 million global members in 2021. Netflix’s business model runs only premium content on its platform, driven by its Netflix Originals shows. Netflix is also building an ad-supported version.
TikTok is owned by ByteDance, a Chinese internet technology company owning several content platforms worldwide (Douyin, Toutiao, Xigua Video, Helo, Lark, Babe). Bytedance passed the $300 billion private market valuation by 2022, making around $58 billion in revenue in 2022, over $4 billion from TikTok.
Gennaro is the creator of FourWeekMBA, which reached about three million business students, executives, and aspiring entrepreneurs in 2021 alone | He is also Head of Enterprise Sales for a high-tech startup, which he helped grow at a double-digit rate since the onset | In 2012 Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
