Google CFO Stepping Down

SAN FRANCISCO (AP) – Google Inc.'s chief financial officer will retire by the end of the year, creating the most prominent job opening at the Internet search leader since it went public three years ago.

George Reyes' departure as CFO, announced Tuesday, was unexpected — a development likely to stir speculation about his reasons for leaving a crucial job at one of the world's most scrutinized companies.

Mountain View-based Google didn't explain why Reyes, the company's CFO since 2002, decided to retire at the age of 53. A Google spokesman declined a request to interview Reyes, who intends to remain on the job while he helps the company find his successor. The transition is expected to be completed before January.

“I know I'm leaving the company in good hands with a remarkable team of professionals that will continue to build on Google's tremendous achievements,” Reyes said in a statement.

Google Chairman Eric Schmidt praised Reyes, adding the company will “miss his thoughtfulness, good humor and wisdom.”

Reyes is among a handful of executives who work closely with Google's ruling triumvirate — Schmidt and Google's co-founders, Larry Page and Sergey Brin.

In some instances, corporate CFOs relinquish their jobs because of accounting shenanigans, plunging profits or a falling out with the chief executive.

But there have been no signs of trouble or strife at Google, whose stock price has soared along with its profits while the company's ubiquitous search engine cemented its position as the Internet's most lucrative advertising network.

Through the first half of this year, Google had earned $1.9 billion on revenue of $7.5 billion.

Google disappointed investors last month when it reported a second-quarter profit that fell slightly below Wall Street's lofty expectations. Management attributed the letdown to a hiring spree that exceeded the company's budgeted plan.

Standard & Poor's equity analyst Scott Kessler doubts the earnings miss factored into Reyes' decision. He thinks it's more likely Reyes is taking advantage of the wealth that he accumulated from Google stock options to enjoy a less stressful life.

“You could argue there is no better time for (Reyes) to move on than when the company is on top of its game,” Kessler said.

At the end of 2006, Reyes held 51,750 stock options with an exercise price of $5 apiece, according to documents filed with the Securities and Exchange Commission. Those options are worth $26 million, based on Google's current market value. Google shares fell $6.86 to $506.40 Tuesday.

Reyes received compensation valued at $1.19 million last year, based on an Associated Press formula. Google raised his salary from $250,000 to $450,000 earlier this year.

Although Google has been sailing along, things haven't been going as smoothly for Reyes' extended family.

Just three weeks ago, a federal jury in San Francisco convicted his nephew, Gregory Reyes, of duping investors by concealing the manipulation of stock options at Brocade Communications Systems Inc. Gregory Reyes is Brocade's former chief executive.

As the executive in charge of Google's books, Reyes played an instrumental role in steering the company through its much-ballyhooed initial public offering in August 2004. The IPO stirred up a backlash on Wall Street because Google used an unorthodox auction to price the shares instead of following a more conventional method that relies investment bankers to determine the value and then distribute the shares to their top customers.

Google also has alienated many analysts and investors by refusing to project its future revenue, a prohibition that contributes to wild swings in the company's stock. Reyes triggered one of the steepest one-day declines in Google's stock last year when he told an investor conference that the company's rapid earnings growth was bound to slow.

Despite Google's sometimes strained relations with Wall Street, the company's stock has increased by nearly six-fold from its IPO price of $85, creating more than $130 billion in shareholder wealth.