The Google logo is displayed outside Google's headquarters in Mountain...

The Google logo is displayed outside Google's headquarters in Mountain View, Calif. (Oct. 8, 2010) Credit: AP

Google Inc. is showing it still knows how to make its employees feel special: It is giving all 23,300 of them 10 percent raises next year.

The Internet search leader also is shifting part of workers’ annual bonuses into their regular paychecks, according to an internal memo sent Tuesday by Google chief executive Eric Schmidt. Those bonuses won’t count toward the 10 percent.

Google has long been known for feeding its workers free food and pampering them with other perquisites that would be considered luxuries by most employees.

But the company began taking away some of the goodies in late 2008 and early 2009. It went so far as to lay off a few hundred people to help boost its earnings during the depth of the worst U.S recession since World War II.

The good times are back at Google this year, though. Revenue rose 23 percent to $21 billion through the first nine months of 2010. Confident of even more prosperity ahead, Google has added 3,500 employees so far this year to expand its work force by nearly 20 percent. It also has been spending heavily on acquisitions and investments in the data centers that run its online services.

The raises are yet another sign of Google’s bullishness. The company didn’t disclose how much the added payroll would cost, but assuming an average employee salary of $100,000 — not outlandish by high-tech standards— the across-the-board raises would amount to an additional $233 million annually.

Google can easily afford that, with $33 billion in cash as of Sept. 30. Schmidt framed the raises as a way to reward “the best employees in the world,” but the largess also may be part of a strategy to slow defections to up-and-coming Internet rivals, such as Facebook.

The rapidly growing online hangout has become more aggressive about recruiting Google workers since it hired one of Google’s top sales executives, Sheryl Sandberg, as its president two-and-half years ago.

“While we don’t typically comment on internal matters, we do believe that competitive compensation plans are important to the future of the company,” Google spokesman Jordan Newman said in a Wednesday statement. Schmidt didn’t address the Facebook effect in his memo.

Facebook, located just a few miles away from Google’s Mountain View, Calif., headquarters, has been able to dangle stock options in what is expected to be a highly lucrative initial public offering within the next few years.

Google’s employee stock options once were a major enticement, but they have been producing smaller windfalls as the company has matured since its own IPO six years ago. Google shares slipped $4.43 in Wednesday’s trading to $620.39, leaving them well below their all-time of $747 reached three years ago.

In his memo, Schmidt said Google’s internal employees had concluded the size of their paychecks had become more important than stock options and bonuses.

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