Google’s new CFO Ruth Porat left her top Wall Street job for a $70 million dollar compensation package. The deal includes a $650,000 a year salary and $70 million in bonuses and stock grants.
Leaving Wall Street for Silicon Valley
Google has hired former Morgan Stanley CFO Ruth Porat as their new Chief Financial Officer. Porat’s base salary will amount to $650,000 per year. Sweetening the deal is a $5 million dollar signing bonus, $25 million in the form of a new hire grant in Google stock and another grant worth $40 million. To get all the money, Porat will have to stay with the tech giant for a minimum of four years. Google has also agreed to pay Porat’s moving expenses for her move from New York to California. She is taking over the position of CFO from Patrick Pinchette, who announced recently that he’s leaving Google to spend more time with his family.
Porat graduated from Stanford and has worked at Morgan Stanley since 1987. She’s been called the most powerful woman on Wall Street. She advised the U.S. government as it worked to untangle the 2008 financial crisis, providing advice on the rescues of Fannie Mae, Freddie Mac and AIG.
Porat also led the way on raising funds for the startup financing rounds of companies like eBay, Amazon, Verisign and Priceline.
Porat isn’t the only Wall Street heavyweight leaving New York for Silicon Valley. Twitter’s new CFO Anthony Noto received $61 million in stock shares to leave Goldman Sachs.
The trend from Wall Street to tech has also trickled down to new college graduates. Only 10% of MIT graduates entered careers in the financial industry in 2014. Compare that to 31% just eight years earlier. Meanwhile, 28% of all MIT graduates went to work in the tech industry in 2014. That’s a flip flop from only 10% entering tech careers in 2006.
Similarly, Harvard business school is pumping 10% less of its graduates into financial industry careers than it did ten years ago. At the same time, the number of graduates entering tech careers has risen by the same percentage.
It’s not that Wall Street is suffering a brain drain. In 2014, Morgan Stanley had 90,000 applicants for about a thousand low level summer jobs. There is however a trend of talent siphoning away from the financial sector, including high-level programmers. At the same time, new financial software firms and applications like Square, Stripe, and peer to peer lending company Prosper are challenging the financial industry. The changes have led some to speculate that it’s not just a drain on human capital from the financial industry to the tech sector, but a paradigm shift in the way finance is being handled.
Financial products like loans, credit cards, payments and banks are now increasingly dependent on software and ever more vulnerable to technological attacks. At some point, it’s not hard to imagine that financial companies will stop hiring programmers to handle the software side of the business, but software firms will start hiring financial people to handle the finance.
- SEC Filing by Google Inc. – SEC.gov
- Ruth Porat Offer Letter – SEC.gov
- Ruth Porat to Join Google as Chief Financial Officer – GooglePress
- Wall St. Stars Join Silicon Valley Gold Rush – New York Times