Meta Platforms (NASDAQ:META) is shaking things up when it comes to executive pay. The company recently approved a plan to boost top executives' bonuses from 75% of their base salaries to as much as 200%.
According to a recent SEC filing, the goal is to better align executive compensation with company priorities and industry standards. But the timing is raising eyebrows—just a week before announcing these pay increases, Meta laid off 3,600 employees, or about 5% of its workforce.
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Meta's board defended the move, saying that before this change, executive compensation was well below that of other tech giants.
The company said in the filing that its executive pay was at or below the 15th percentile compared to similar roles at peer companies. The bump to 200% will bring their compensation to around the 50th percentile, making it more competitive in the industry, the filing added.
The announcement comes as many former employees are still processing recent job cuts. Meta said it let go of workers based on performance, but some of those affected are pushing back on that explanation.
A former content manager shared on LinkedIn that she had consistently received positive feedback, was never placed on a performance improvement plan, and wasn't given clear expectations before losing her job.
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Meta isn't alone in making these kinds of decisions. Other tech giants have followed a similar playbook—Microsoft (NASDAQ:MSFT) approved a 63% raise for CEO Satya Nadella shortly after laying off 1,900 employees in its gaming division.
On top of that, Business Insider reported last week that Meta has also reduced the value of annual employee stock options by 10%, despite its stock performing well. That's a big deal since many employees rely on stock-based compensation as a key part of their earnings.
Not surprisingly, industry experts are divided on whether these pay increases are justified. Some argue that competitive compensation is necessary to attract and keep top talent, especially as companies like Meta invest heavily in artificial intelligence and other growth sectors. According to Gallagher's CEO and Executive Compensation Trends report, making sure executive pay is in line with industry benchmarks is crucial for stability at the leadership level.
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Others warn that growing pay gaps between executives and employees can cause major problems. A report from the Institute for Policy Studies and the Congressional Progressive Caucus Center found that extreme pay disparities can lower productivity and increase turnover.
Public sentiment also leans against these widening gaps—according to a Just Capital poll, 87% of Americans believe the growing difference between CEO and worker pay is a problem.
Even with the controversy, Meta is doing well financially. In its Q4 2024 earnings report, the company posted a 21% year-over-year revenue increase, hitting $48.4 billion and exceeding Wall Street expectations. The company credited AI-driven improvements in advertising and product innovation for the growth.
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This article Meta Boosts Executive Bonuses To 200% As It Slashes 5% Of Workforce—Laid-Off Employees Call It 'Unfair' originally appeared on Benzinga.com
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