Meta Platforms Inc. has approved a new executive bonus plan, allowing named executive officers to earn up to 200% of their base salary. This decision follows a recent wave of layoffs affecting 5% of the company’s workforce. The updated bonus plan, however, does not apply to CEO Mark Zuckerberg. The move comes as Meta shares have surged over 47% in the past year, buoyed by investor confidence in the company’s expanding digital advertising market and potential AI investments.
Committee Approves the Bonus Increase
The approval of the new bonus plan was made by a committee of Meta’s board of directors on February 13. This decision reflects an increase from the previous plan, which allowed executives to earn only 75% of their base salary. The committee considered the “target total cash compensation” for executives at peer companies as a significant factor in this decision.
“Following this increase, the target total cash compensation for the named executive officers (other than the CEO) falls at approximately the 50th percentile of the Peer Group Target Cash Compensation.”
The announcement comes amid a challenging period for employees, as Meta recently reduced its annual stock option distribution by about 10% for thousands of workers. This reduction forms part of a broader corporate strategy that was outlined in a filing made public on Thursday. Despite these internal shifts, Meta’s financial performance remains robust, with fourth-quarter revenue rising 21% year-over-year to $48.39 billion.
Investor enthusiasm has been a driving force behind Meta’s stock performance, which closed at $694.84 on Thursday. This optimism stems from the company’s growing sales in digital advertising and potential returns from AI investments.
“was at or below the 15th percentile of the target total cash compensation of executives holding similar positions”
The decision to enhance executive bonuses, while reducing stock options for employees, aligns with Meta’s strategy to remain competitive with peer companies’ compensation structures. The committee’s report highlighted that prior to this adjustment, Meta’s executive compensation was lagging behind industry standards.
Author’s Opinion
Meta’s decision to significantly increase executive bonuses, while reducing stock options for employees, highlights a growing divide between top leadership and the wider workforce. While the surge in Meta’s stock and investor optimism justifies the boost in executive compensation, the reduction in employee stock options may breed dissatisfaction among workers. The shift could ultimately affect morale, especially if employees feel their contributions are undervalued compared to the executive rewards, which could have long-term consequences on employee retention and engagement.
Featured image credit: Vitya_maly via GoodFon
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