Meta reduces stock options for employees by 10% despite record stock highs, sparking questions about its financial strategies and executive compensation plans.
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| Meta’s decision to cut stock options by 10% despite record profits raises questions about executive compensation and its long-term strategy for growth. Image: ChicHue |
New York, NY, USA — February 22, 2025:
Meta Platforms, the parent company of Facebook, is facing scrutiny after announcing a 10% reduction in its yearly stock options distribution to employees, despite the company's shares hitting record highs earlier this month. This decision, reported by the Financial Times, comes at a time when Meta's stock performance has been on a significant upswing, raising questions about the company’s compensation strategies.
Employees, who typically rely on stock options as a major part of their compensation, have been informed that their equity grants will be smaller this year. The reduction is expected to vary depending on the employee’s role and location, with the cut affecting tens of thousands of Meta workers globally. Stock options are a key component of Meta's remuneration package, often surpassing base salaries and annual bonuses.
Despite these cuts, Meta is simultaneously enhancing its executive compensation program. The company approved a substantial increase in the target bonus for executive officers, raising it to 200% of base salary from 75%. Interestingly, this bonus plan update does not apply to CEO Mark Zuckerberg, indicating that higher-ups in the company are being given more financial incentives to drive future growth, particularly in Meta's ambitious AI endeavors.
Meta has also been actively restructuring its workforce, with plans to trim 5% of its "lowest performers" and hiring to fill impacted positions. While the company has enjoyed a surge in stock value, fueled by its AI investments and a favorable Supreme Court ruling against TikTok, it has also warned of potential underperformance in upcoming sales, highlighting the mixed results from its AI bets.
The stock options reduction has sparked concerns about employee morale, especially as the company continues to push ambitious growth initiatives. Many are questioning whether cutting back on employee stock options while ramping up executive bonuses aligns with the company’s stated values, and what impact this might have on long-term employee retention and satisfaction.
As Meta continues to navigate its future, it faces the challenge of balancing financial performance, employee compensation, and the need for transformative investments in emerging technologies. The decision to reduce stock options, particularly while rewarding executives more handsomely, may prompt further debate on how tech giants prioritize compensation and their workforce’s long-term success.