Are people really worth this much money? I can't help but think "$3.5m gets me 15 really good developers for a year, and a swimming pool filled with chocolate pudding, just for fun."
If the guy is really top 1% in the world, why not? How much do the top 1% athletes, musicians, etc, make? An argument can probably be made for a top 1% coder.
The top 1% athlete? On average probably about $0. There are probably a few hundred thousand high school football players. There are only 32 NFL teams. Even among those few that make it (probably much smaller than 1% I'd wager), few are superstars. Taking into account chance of injury, short career, and brain damage (in this case), the ~ $700K NFL salary isn't so great.
And musicians? Their situation is probably worse! The truth is talent is pretty bountiful. Finding out that no matter what hot shit you were in high school, there's an army of kids out there ten times smarter is a veritable right of passage. Maybe this guy is the top .01%, but I think the value you can extract from the relative brilliance of one member is a case of diminishing returns. Is he doing, 100% of the time, work that an actual 1% guy or several of them couldn't do?
I don't buy it, not from a company as large as Google who has more institutionalized about scaling and building web properties. Just because it sounds really cool that Google throws gobs of money at engineers doesn't necessarily make it the best approach. It sounds like a fear-driven tactic, and if they're that worried about keeping talent, they're probably not going to put that good talent to use anyways.
