Facebook parent company Meta is cutting down on stock options for its employees. As reported by the Financial Times on Feb. 20, Meta Platforms has cut back on its yearly distribution of stock options by about 10% for tens of thousands of employees despite the social media giant trading at record highs this month.
Employees get additional stock options each year, which make up most of their pay, along with their regular salaries and yearly bonuses. These stock options add up over time and become fully theirs after four years, with a portion becoming available every three months.
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The news comes as Meta planned to cut 5% of its staff in performance-based layoffs, affecting approximately 3,600 jobs in January 2025. ”I’ve decided to raise the bar on performance management and move out low-performers faster,” Chief Executive Officer Mark Zuckerberg said in an internal message.
Instead, the social media giant is riding the AI wave and focusing all of its efforts on building cutting-edge technologies. Just this past month, Meta announced its plans to invest in AI-powered humanoid robots. The tech behemoth also unveiled its partnership with UNESCO on a speech recognition and translation AI project to uplift “underserved languages.”
The latest quarter for Meta has seen an incredible 21% growth in quarterly revenue, following a big push for AI. Zuckerberg said he expected 2025 to be the year “when a highly intelligent and personalized AI assistant reaches more than 1 billion people,” and that he hoped Meta AI to be that AI assistant.
What are stock options?
Stock options are a benefit given to employees that give them the right to buy company stock at a set price (called the “exercise” or “strike” price) after a certain period of time. Employees can typically buy the stock at that price even if the stock’s market value goes up. If the stock price rises above the exercise price, employees can buy the stock at the lower price and sell it for a profit.
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Stock options are often used as an incentive to keep employees with the company long-term, as they usually “vest” over a period of time like four years, meaning employees earn the right to exercise the options gradually.
As reported by the FT, most employees have been informed that they will get around 10% less in stock options this year, based on sources close to the situation.