Google's top execs keep $1 salaries amid turmoil

Google Inc. Chief Executive Eric Schmidt and co-founders Larry Page and Sergey Brin maintained their traditional salaries of $1 last year even as the value of their combined stakes in the Internet search leader plunged by nearly $26 billion.

The paltry paychecks, disclosed Tuesday in a regulatory filing, come as no surprise because Schmidt, Page and Brin have insisted on their annual salaries remaining at $1 since Google (nasdaq: GOOG - news - people ) went public in 2004.

The trio also don't get any bonuses or the stock awards that most of Google's other 20,000 employees receive.

That's because Page and Brin, who founded the company in 1998, already are Google's largest stockholders with about 29 million shares apiece.

Page, 36, and Brin, 35, made Schmidt, 53, a major shareholder when they hired him as CEO in 2001.

 

Schmidt received perquisites valued at $508,763 last year, mostly to cover personal security bills totaling $402,562. Google also paid a total of $106,201 to fly his family and friends on airplanes chartered by the Mountain View, Calif.-based company.

Including his perks, Schmidt's 2008 compensation package edged up 6 percent from 2007 when his package totaled $478,662.

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The Associated Press formula is designed to isolate the value the company's board placed on the executive's total compensation package during the last fiscal year. It includes salary, bonus, performance-related bonuses, perks, above-market returns on deferred compensation and the estimated value of stock options and awards granted during the year. The calculations don't include changes in the present value of pension benefits, and they sometimes differ from the totals companies list in the summary compensation table of proxy statements filed with the Securities and Exchange Commission, which reflect the size of the accounting charge taken for the executive's compensation in the previous fiscal year.

 

Limiting their salaries to $1 didn't seem like a big sacrifice for Schmidt, Brin and Page until 2008. That's because they became multibillionaires as their holdings in Google soared eight-fold between the time of the company's initial public offering in August 2004 and the end of 2007.

Although all three men remain among the world's wealthiest people, they suffered a major setback last year. Combined, their fortunes plunged by a combined $25.8 billion, or nearly 56 percent, in 2008, as investors began to fret that Google would be hurt by the faltering economy.

Google held up better than many people feared as its revenue rose 38 percent to $21.8 billion, but the company's stock price still plummeted from $691.48 at the close of 2007 to $307.65 at the end of last year.

Google shares have rallied along with the overall market recently, closing Thursday at $347.17.

The steep decline in Google's market value prompted the company to recently decrease its employees' cost to exercise a total of 7.64 million stock options. The re-pricing gives the 15,642 who participated in the program a better chance to strike it rich in future years.

Signaling its intent to hand out even more stock options as it expands, Google wants to add another 8.5 million shares to the pool of available awards. The request will be voted on at the company's annual meeting May 7.

Other Silicon Valley billionaires, such as Yahoo Inc. (nasdaq: YHOO - news - people ) co-founder Jerry Yang and Apple Inc. (nasdaq: AAPL - news - people ) co-founder Steve Jobs, also have limited their salaries to $1 while serving as CEO.

But mogul CEOs haven't been as egalitarian. For instance, Oracle Corp. (nasdaq: ORCL - news - people ) CEO Larry Ellison pocketed a $1 million salary in the company's last fiscal year and received an additional 7 million stock options valued at $71.4 million when they were granted.

I could, however, afford the $229 iPod Touch - and got it as a gift, as it happened. It has most of the same goodies: a Web browser, e-mail, YouTube. And it stores way more music than the iPhone. (Ha!)

Plus, the other day I used it to call China.

Yup, a call around the world - on a device that doesn't have a phone. A handful of applications on Apple Inc.'s iTunes store will let you do this, as long as you're in a Wi-Fi hot spot.

My iPhone complex hasn't disappeared, but at least now I have a device that looks just like it, has no monthly service fees, and lets me make free or cheap phone calls.

The best part of these applications - which require the second-generation iPod Touch that came out last year - is that they are free to download, and calls to other people using the same app won't cost you anything.

Two of the services I've tried, Truphone and Fring, will also let you make free calls to Google Talk users and type instant messages to friends online. Both automatically queue up a list of buddies from different services you might have, including Gmail chat, AIM and MSN Messenger, once you log in.

But it's Truphone's pay feature that puts it ahead of the others. TruPhone charges you to make calls to landlines or regular cell phones, but generally at better rates than most wireless carriers. And it's upfront about what you pay.

Your balance - which you can add to with a credit card, either on the device or on your computer browser - pops up with the dial screen. Calls in the U.S. are all 5 cents per minute (2 cents if you sign up to pay a $4 monthly fee).

Rates outside the U.S. vary wildly but you can check in the application before you dial. To call cell phones in China, for instance, is only 5 cents per minute, while France is 25 cents. Antarctica? A whopping $2.25.

You can make regular calls with Fring using a Skype account, but that's another layer to deal with.

The calls on these services sound pretty good, a little tinny but clearer than my regular cell phone connection. IPod Touch users will need Apple's $29 ear buds that have a tiny microphone on the back of the volume control along the cord.

The most serious drawback is the most obvious: While the iPhone uses AT&T's wireless network to provide Internet access anywhere, on the iPod Touch you'll need to stick to Wi-Fi hot spots. For rural or suburban dwellers who don't encounter lots of free Wi-Fi zones, that may very well mean limiting yourself to your house, or other places where there's a computer with the same Internet phone call capabilities anyway.

That means these apps probably won't replace your cell phone. But they can moderate your iPhone envy.

Copyright 2009 Associated Press. All rights reserved. This material may not be published broadcast, rewritten, or redistributed

The multibillion-dollar Madoff mess proves one thing: Even the most sophisticated of investors are susceptible to fraud. It also proves that relying on highly paid financial advisers or the Securities and Exchange Commission won't protect you from getting ripped off.

Madoff's alleged $50 billion Ponzi scheme had the appearance of being a legitimate operation. Until recently, Madoff was paying dividends, sending out monthly statements and fulfilling withdrawal requests. It wasn't until early December when he admitted to having requests from clients for approximately $7 billion in redemptions that the Ponzi scheme started to collapse. Madoff simply didn't have the funds to meet those obligations. The jig was up.

In the case of Madoff, investors turned a blind eye to due diligence that could have been done. "Sometimes the bigger someone is, the less vetting people do," says fraud expert S. Gregory Hays, managing principal, Hays Financial Consulting. "Investors sometimes assume that someone else did their homework." And in the case of Madoff's scheme, the multitude of seemingly sophisticated investors and accomplished business people--from Mortimer Zuckerman to HSBC (nyse: HBC - news - people ) and Groupo Santander--no doubt lent credibility as Madoff expanded his ponzi.

For most investors the best way to keep a Ponzi out of your portfolio is to follow the common sense rule of "if something sounds too good to be true, it probably is." It also is best to ask lots of questions and beware of any potential investment or adviser that is overly secretive in terms of explaining investment strategy.

In Pictures: 10 Fraud Red Flags

In the case of Madoff, it was difficult to rely on publicly available information to discover that a fraud might have been taking place, since little was available. "There were no lawsuits or claims that he was defrauding people," says Kenneth S. Springer, former special agent of the Federal Bureau of Investigation who is now a certified fraud examiner and president and founder of New York-based Corporate Resolutions.

The one red flag that might have raised suspicions was the fact that Madoff used a tiny accounting firm in New City, N.Y., Friehling &

Of course the best way to discover a sophisticated scheme would be to hire someone to do on-site financial due diligence. Sometimes, large, institutional investors are even allowed to do surprise audits. "You would want to look at the trading and see what kind of transparency was there to see where the money was really being invested, too," says Springer. "Had people done that, many wouldn't have been satisfied with what they would have found out, and they would have walked away." Investors could have also hired an investigator to examine and interview the prime broker and administrators, he adds.

Special Offer: Larry Kudlow teases Gary Shilling about being bearish, but Gary was right! The housing market crashed, banks went under, and now it's bailout time. Think the problems have passed? Think again, before you invest. Click here for advice to keep your wealth with Gary Shilling's Insight.

Job-Keeping

Job security is a skill.

In Pictures: Seven Tips For Keeping Your Job

As we head deeper into what promises to be one of the worst recessions in living memory, there is certain to be less hiring and more firing. In this job market, it is no longer enough to be good at getting a job--you have to be good at keeping it.

According to a recent survey by Dice Holdings, a New York-based creator of career Web sites, two-thirds of companies are hiring fewer people and one-third are expecting layoffs in the next six months. Not too surprising. There have already been 120,000 layoffs since Nov. 1, just among the 500 largest American public companies, tracked on the Forbes.com Layoff Tracker.

Yahoo! Buzz

What's one to do? Being great at your job isn't enough--after all, no one is indispensable. All you need to be is more indispensable than the next guy.

In Pictures: Seven Tips For Keeping Your Job

Forbes.com Layoff Tracker

Take on extra responsibility. Run extra reports or volunteer for special projects. Consider organizing the office holiday party or other events (blood drives, volunteer programs). These activities will make you valuable even if your job no longer exists, says Jo Prabhu, chief executive of placement firm International Services Group. You don't necessarily need to work more hours; you need to diversify what you do with the hours you do work.

"Find your expertise," says Darryl Sample, who teaches managerial and business classes at University of Alaska, Anchorage, and Central Texas College. He suggests finding something missing in your pool of coworkers. Learn a few things about, for example, green energy, corporate social responsibility programs or the next big industry trend, then make a suggestion in line with your company's goals. All at once, you'll show forward thinking, an alignment with company objectives and skills or knowledge above the guy next to you.

Affordable Places To Escape The Cold

Airlines and hotels in warmer locales are cutting prices to keep the tourists coming.

In Pictures: Affordable Places To Escape The Cold

Spending winter in a major city is substantially less fun than those scenic television shots might lead one to believe. The sidewalks are icy, the skyscrapers work together to perform perfect wind tunnels and crazed hordes of holiday shoppers can make December almost intolerable.

When average daily temperatures dip far below freezing, it's time to get out of the city. But with the economy struggling, sunbathing on a private beach in Maldives may not be a financially feasible option.

In Pictures: Affordable Places To Escape The Cold

Fortunately, getting warm this winter doesn't have to break the bank. Travelers who stick close to home, select up-and-coming locations and score travel deals from financially ailing resorts and airlines can get out of the cold for an affordable price.

Central America and the Caribbean deliver a major cost-saving advantage, according to Tim Leffel, author of The World's Cheapest Destinations: 21 Countries Where Your Money Is Worth a Fortune.

"If you're coming from the U.S., you don't have to pay very much to get there, and there's less jet lag, so you can really hit the ground running," he says. Better yet, both regions contain a plethora of lesser-known destinations where the U.S. dollar is especially strong.

Up-and-Coming Spots
Honduras, home of the largest coral reef in the northern hemisphere, is behind the tourism curve, as just 383,000 non-Central American tourists visited the country in 2007. This is starting to change.

Leffel recommends the island of Roatan off the country's Atlantic coast, where travelers can expect warm weather and wallet-friendly hotel deals, like the $799 low-season dive special at Anthony's Key Resort. The price includes a room for seven nights, three meals a day, a tropical picnic, an island fiesta, a buoyancy control workshop and dive equipment and transportation for up to 23 dives. Roatan is especially attractive for new divers--certification there is cheaper than almost anywhere else in the world.

Apple (AAPL) is the only company I know that can tell its customers what they want and make them like it. Nobody else has pulled that off since Henry Ford decreed that consumers could get a Model T in any color they liked as long as it was black. The latest MacBook and MacBook Pro computers suggest that Apple has not lost its touch.

The difference between Apple and the rest of the industry is stark. Dell (DELL) sells 26 laptop models, each available in many configurations, while Apple offers five, with few hardware options. The average selling price for MacBooks and MacBook Pros in September was $1,483, compared with $689 for Windows notebooks, according to market researcher NPD Group. The point isn't that Macs are overpriced for what they are but that Apple offers only high-end products. Yet despite these seeming disadvantages in variety and price, NPD notes, Macs grabbed nearly 18% of the U.S. retail notebook market in September, a jump of nearly three percentage points since last year.

It's not easy to come up with a dramatic design breakthrough in what is largely a mature product category. Last year, Apple offered the revolutionary MacBook Air, but its extreme thinness and lightness was achieved at a sacrifice in functionality that wouldn't be O.K. in its workhorse laptops.

A Solid Lineup

The latest notebooks should keep Apple's winning streak going. The two new products are a 15-in. MacBook Pro (from $1,999) and a 13.3-in. MacBook (from $1,299), now in a Pro-like aluminum case. Rounding out Apple's family are the old white MacBook ($999), the 17-in. MacBook Pro (from $2,799), and the Air (from $1,799). The last two models got processor and graphics upgrades but are otherwise unchanged.

The most striking feature of the new laptops is their huge and extremely usable touch pad. I have long preferred pointing sticks to touch pads, but Apple's latest innovation might change my mind. As in the last generation of MacBooks, this pad uses multitouch: One finger moves the cursor, two fingers scroll the display. What's new is there's no button—just press firmly on the pad, and you feel a button-like click. One finger gives a standard mouse click. Press with two and you bring up a menu appropriate for what you are doing, just like a right click on the mouse. It's simple, and it works.

The MacBook Pro is equipped with two Nvidia (NDVA) graphics adapters. Users can switch between a GeForce 9600M GT to get maximum performance for games, video editing, or other graphically intense applications, and a less capable 9400M chip for best battery life. Expect similar dual-graphics technology to show up on high-end Windows notebooks as well.

Older Hardware Connections Impacted

MacBook fans may find some other changes disconcerting. Apple is relentless in scrapping old technologies. This time, that may be painful for users of older external monitors and video cameras. Both new Mac models use an external video connector called DisplayPort that only plugs directly into the new $899 Apple LED Cinema Display. For all other monitors, you'll need a $29 adapter. Try using an older video camera and there's a worse catch. Apple has eliminated the FireWire port on the MacBook, rendering cameras that connect to computers only with a Firewire cable unusable. The Pro does have a FireWire port, but it's a new version, called 800, so you'll need another adapter cable to use it with a FireWire 400 camera.

With special software, it is now easy to run Microsoft Outlook and other Windows programs on the Mac. I use VMware's Fusion 2.0 virtual machine software on the MacBook Pro, and the results are so good that I'm longing to take a Mac laptop on the road. But that's where Apple's limited variety is a problem. At 4½ lb., even the 13-in. MacBook is too heavy, while the Air is too limited. Oh, well. Apple has never tried to be all things to all people. It may not solve my problem, but Apple's way seems to work just fine for the company and most of its fans.

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Amid the roiling waters of the stock market and economy, which have tossed tech investors around for weeks, Apple Chief Executive Steve Jobs made a special guest appearance on Apple's fourth-quarter earnings call Oct. 21 to try to calm things down.

Profits soared (BusinessWeek.com, 10/21/08) on knockout iPhone numbers and strong Mac and iPod sales. But Jobs wanted to make a point broader than any one quarter's results: Apple planned to seize the opportunity of these difficult times to bolt ahead of the competition. He pointed out that Apple (AAPL) has nearly $25 billion in the bank. The economy could present "some extraordinary opportunities for companies that have the cash to take advantage of them," Jobs said. "We may get buffeted by the waves a bit, but we'll be fine—and stronger than ever when the waters calm in the future."

These are difficult times for all companies. But some are figuring out how to thrive amid the turmoil. BusinessWeek's annual Tech Hot Growth ranking shows the sector's top 75 performers over the past year. Some have done well because they help their customers cut costs—witness IBM (IBM), Accenture (ACN), and software maker VMware (VMW). Others made the cut because they help customers generate more revenue in good times or bad. Google (GOOG), for example, reported a surprisingly strong quarter (BusinessWeek.com, 10/17/08) on Oct. 16, because companies that get sales from online advertising kept on spending. It also doesn't hurt to sell to the government, whose buying tends to be somewhat insulated from the broader economy. That factor propelled infrared technology supplier Flir Systems (FLIR) and defense suppliers Mantech International (MANT), Harris (HRS), and SAIC (SAI) into prime spots on this year's scoreboard.

Gilead Sciences at No. 1

The ranking is based on a number of metrics. Revenue growth counts the most, although total revenues, shareholder return, and return on equity all factor in, too. The ranking is based on the most recent four quarters available, as of Oct. 15.

Gilead Sciences (GILD), the top-performing company on the list, booked big gains in profits and return on equity through sales of its drugs to treat AIDS, hypertension, hepatitis B, and other diseases. It has capitalized on the success of its most recently approved HIV drug, Atripla, and its 2006 acquisition of pharmaceutical company Raylo Chemicals.

At the fastest-growing information technology companies, it's clear you need to take a different attitude in downturns than in normal times. You must focus on why you're going to stand out from your competition and why your customers will need you more than they need your rivals. You have to think aggressively—as Jobs is doing—rather than defensively, in retreat. "Selling more of the same doesn't work," says John S. Chen, CEO of Sybase (SY), which provides database software used widely on Wall Street and which ranked No. 34 on this year's list. Because Sybase customers Bear Stearns, Lehman Brothers, and Merrill Lynch (MER) have disappeared, Chen is concentrating on helping the finance industry's consolidators, including Barclays (BCS) and Bank of America (BAC), find new ways to reduce operating costs. "I'm desperately creating a lot more new functionality," he says.

So far, so good. On Oct. 21, Sybase reported that third-quarter sales rose 11% to $284 million, and profits rose 2%. Sybase's profits were up more than 77% during the 12 months ended in June, according to BusinessWeek's analysis.

Stock Woes For All

Tech companies are scrambling for advantage in these lean times. Intel (INTC) is one of several catering to budget-minded shoppers. The chipmaker is ramping up production of processors for a new class of small portable notebooks that cost as little as $300 to $400. Oracle (ORCL) has spent $34 billion on 50 acquisitions over the last 44 months and plans to shop for additional bargain buys in order to generate recurring product-support revenues, which roll in during good times and bad. And in the past five weeks, Microsoft, Hewlett-Packard, and Oracle have announced plans to buy back billions of dollars of their own shares.

Still, it's been a rocky road for the stocks of even the best-performing companies. The average share-price return for the 75 companies on the scoreboard was -37%, and the top 10 on the list generated an average return of -22%. Dell (DELL), which posted big gains in profitability and return on equity by cutting costs and revamping its products and distribution strategy, has warned of a tougher environment ahead. And investors worry that the down economy may erode prices for such premium brands as Apple and Salesforce.com (CRM).

"We'll be prudent," says Robbie Bach, president of Microsoft's $8 billion Entertainment & Devices Division, which makes the company's Xbox game console and Zune music player. Microsoft hopes consumers buy more Xboxes as they resort to stay-at-home entertainment instead of going out. But Bach doesn't think consumers' holiday spending will accelerate until after the Presidential election. "At this time of year, we're talking to our retail partners every day," he says.

Parents and children may rush through their days in different directions, but the American family is as tight-knit as in the last generation -- or more so -- because of the widespread use of cellphones and the Internet, according to a new poll.

In what was described as the first detailed survey of its kind, released today, researchers reported that family life has not been weakened, as many had worried it would, by new technology. Rather, families have compensated for the stress and hurry of modern life with cellphone calls, emails, text messages and other new forms of communication.

"There had been some fears that the internet had been taking people away from each other," said Barry Wellman, a sociology professor at the University of Toronto and one of the authors of the report, published by the Pew Internet & American Life Project. "We found just the opposite."

In the poll, 60 percent of adults said that the new technologies did not affect the closeness of their family today. Another 25 percent said cell phones and online communication made their families closer, while 11 percent noted that the technology had a negative effect.

Wellman said families appreciated the innovations because "they know what each other is doing during the day." This, he said, comports with his other research, which shows that technology "doesn't cut back on their physical presence with each other. It has not cut down on their face time."

The findings were based on a nationally representative poll of 2,252 people, which explored technology use and profiled in greater detail a group of 482 adults who were married or living together with minor children. These "traditional nuclear families" have been of particular scholarly interest, the report's authors said. They tried to examine trends in single-parent families, too, but the poll numbers were too small to be valid, they said.

Cellphones and internet use were widespread in two-parent houeholds, regardless of education, income, employment, race or ethnicity, with 94 percent saying at least one adult was online and 84 percent saying children were using the Internet.

This marks a large change in short order. Only since the turn of the century has a majority of Americans been users of the Internet and cell phones, researchers said.

When technology has changed family life, those polled said it was for the good.

Forty-seven percent of adults cited said cellphones and the internet had improved the quality of their family communication. Another 47 percent said there was no effect, and 2 percent said there there had been a decrease in quality.

The positive effect reflects family life for Randy and Ana Tillim of Germantown, who have two children. Their sons play online. Both parents rely on Blackberrys not just for work, but for the stuff of daily life. They let each other know about schedule changes, dinner plans, sick children.

"I think it brings us closer because we're able to communicate throughout the day," says Randy, 38. "I don't know what we did without it."