Yahoo Finance Google must cut thousands more ‘overpaid’ workers, investor demands
Google staff are overpaid and the tech giant must cut thousands more jobs, a British activist investor has said.
Sir Chris Hohn, who previously donated to Extinction Rebellion, wrote in a letter dated January 20 that Google's 12,000 layoffs did not cut deep enough to reduce bloat at the tech giant.
The billionaire founder of The Children's Investment Fund Management (TCI) , who holds a $6bn stake in Google-parent company Alphabet, wrote to chief executive Sundar Pichai, warning: "Ultimately management will need to go further."
"The 12,000 jobs is a step in the right direction, but it does not even reverse the very strong headcount growth of 2022."
Sir Chris, who last year paid himself a record £1.5m a day, added Google should look to "address excessive employee compensation", warning the median salary at Alphabet was nearly $300,000. He said the company should moderate stock-based payments.
He said Alphabet had more than doubled its headcount over the last five years, adding 30,000 jobs in the first nine months of 2022.
"I believe that management should aim to reduce headcount to around 150,000, " he wrote, "this would require a total headcount reduction in the order of 20pc."
The 12,000 job cuts at Google represented a reduction of around 6pc of its workforce.
The investor said he had been in dialogue with Mr Pichai and was "encouraged" by him taking "some action to right size Alphabet's cost base".
TCI, which manages around $40bn, was launched in 2003 and has given billions to children's charities. Among its alumni is Prime Minister Rishi Sunak. The fund's current top holding is Google parent company Alphabet.
The billionaire investor first called for a shake-up at Google in November, urging Mr Pichai to make job cuts.
Last week, Google confirmed that 12,000 people would be let go across its businesses amid the growing economic gloom and a fall in demand for digital advertising.
Sir Chris last year paid himself a record $690m in the year to February, 2022, equating to roughly £1.5m per day, according to his fund's latest accounts. He is thought to be one of the single biggest donors to the Extinction Rebellion, the direct action climate protest group.
Activist investors have taken a swipe at tech companies for over-hiring during the pandemic. Google, Facebook-owner Meta, Microsoft and Amazon all added tens of thousands of staff amid a bet on a permanent digital transformation. All four have now confirmed they will cut tens of thousands of staff.
Last week, Mr Pichai said he took “full responsibility for the decisions that led us here”.
On Sunday night, it emerged that activist investor Elliott Management had taken a stake in marketing technology company Salesforce.
Salesforce has already confirmed it will cut around 10pc of its staff, about 7,000 jobs.
Elliott, founded by billionaire investor Paul Singer, is known to agitate for change at companies, including for cost-cutting and divestments, in order to generate shareholder value.
Jesse Cohn, managing partner at Elliott, said: "We look forward to working constructively with Salesforce to realize the value befitting a company of its stature."
