Ruth Porat, one of the most senior professional women in Wall Street is making her move from the East Coast to Silicon Valley to start work as the Chief Financial Officer (CFO) for Google on 26 May 2015.
She is set to receive a cash award of over $70m in her first year, seven times the amount she was paid annually in the 4 years she was CFO of tech banking franchise, Morgan Stanley. The new package includes an immediate stock grant of $25m and a cash signing-on bonus of $5m and next year, Google will also give Porat $40m worth of restricted shares as part of the biennial stock awards given exclusively to its top executives.
In the past, Google has justified these large rewards by stating that C-level employees are bound to long-term performance but this announcement means that Porat will receive the money prior to any big impact made to the company.
Porat has provided fresh hope for Google as shares rose 3% since the hire was announced. Hiring a professional from the financial industry could mean the attitude that investors hold about Google’s reckless spending will change for the better. As well as this, shareholders will feel more at ease because Google may be more willing to share information about recent investments, unlike the reluctance they showed with investments such as YouTube.
Mark Mahaney, internet analyst at RBC Capital Markets reiterated this and said he believes that the appointment of Porat would lead to “firmer cost controls and an increased possibility of cash returns” for Google.
There are many benefits of hiring a finance professional for a technology company and Porat says she is excited about having “the opportunity to experience first-hand how tech companies can help people in their daily lives.”
Porat led Morgan Stanley during the internet boom after joining in 1987 and played an important role in making it possible for businesses to borrow money cheaper than Goldman Sachs, their arch-rival. More recently, she was responsible for the banking franchise being seen as a stable organisation again by regulators and investors, rather than as a failing bank.
Morgan Stanley have described Porat as the “lead banker on numerous technology financing milestones” which include deals for companies such as eBay and Amazon. Porat’s replacement has been announced as Jonathan Pruzan, the co-head of the financial institutions group.
Porat will replace current 52-year-old Google CFO, Patrick Pichette who recently announced that that he wanted to spend more time with his family but would stay on to help search for a new “Googley CFO.” To ensure a smooth management transition, the company said Pichette will receive more than $20m.
Porat’s move from Wall Street follows the example of other senior figures in the finance industry who have moved into technology. Imran Khan recently left Credit Suisse to become the chief strategist for Snapchat and more significantly, the former CFO of Goldman Sachs, Anthony Noto, is now in the same position for Twitter and received a stock award worth £61m when he made the switch.
The relationship between finance and technology is ever growing and the hiring of Porat as CFO of Google will not only fulfil the company’s requirements but also helps to benefit the reputation of the technology business.