In January, over 100,000 tech employees lost their jobs with the industry’s biggest players Google, Amazon, Meta, Twitter, Microsoft and others leading the way. The layoffs impacted 102,943 workers, a more than two-fold jump from December and an over five-times surge from a year earlier, according to the report from employment firm Challenger, Gray & Christmas Inc.
The push to correct pandemic excesses has been most evident in the tech sector, which slashed 41,829 jobs last month in the US, the highest across industries. Retailers, second after tech, cut 13,000 positions in January, compared with virtually no layoffs a year earlier. Financial firms, meanwhile, shed 10,603 jobs last month, up from 696 roles a year earlier.
CEO paycuts follow
As tech layoffs continue, market leaders are announcing that their CEOs and top executives will take a pay cut. These announcements, combined with the layoffs, is part of the bid to ride out a demand downturn as consumer and corporate spending shrinks due to high inflation and rising interest rates.
Recent announcements include paycuts for Apple CEO Tim Cook, Morgan Stanley CEO James Gorman and Goldman Sachs CEO David Solomon, among others. Intel Corp said on Tuesday, Reuters reported, that it had made broad cuts to employee and executive pay, ranging from 5 per cent of base pay for mid-level employees to as much as 25 per cent for Chief Executive Pat Gelsinger.
Cuts to million-dollar salaries
Apple Inc. is cutting Chief Executive Officer Tim Cook's compensation by more than 40 per cent to $49 million in 2023, citing investor guidance and a request from Cook himself to adjust his pay. Goldman Sachs Group Inc. CEO David Solomon saw his 2022 compensation trimmed by about 30 per cent to $25 million.
Alphabet Inc.'s compensation details haven't yet been released, but CEO Sundar Pichai has said that senior executives will get significantly lower bonuses this year.
Microsoft Corp., which announced January 18 that it'll slash 10,000 jobs, gave CEO Satya Nadella a 10 per cent bump to $55 million in the year through June 2022. Speaking at the World Economic Forum in Davos, Switzerland, this month, Nadella acknowledged that "we will have to do more with less" going forward.
Salesforce Inc. CEO Marc Benioff's pay, which has held steady for several years, was about $29 million in 2021. His 2022 calendar year compensation, usually publicized with a filing in late April or early May, isn't yet known.
Falling share prices alone are already cutting compensation for many CEOs if their pay package is heavily contingent on the company's stock performance, even without a symbolic gesture.
How much are these CEOs earning now?
Apple's Cook was among the highest paid executives in 2021, drawing a multi-million dollar salary in addition to stock.
The $49 million for Cook in target compensation for 2023 includes the same $3 million salary and $6 million bonus as in 2022, as well as an equity award value of $40 million.
Amazon.com Inc. CEO Andy Jassy, by contrast, gets $175,000 a year in base pay, with most of his compensation coming in the form of stock awards. His 2022 compensation has yet to be announced, but is expected to be down significantly from a year earlier as Amazon shares fell by half.
Google’s Sundar Pichai will see a bump in his stock-based pay, the company said last year, tying it to his performance. According to Reuters, Pichai, who is given an equity award every three years, was granted two tranches of PSUs with a target value of $63 million each and was also given a grant of $84 million in the form of Alphabet's restricted stock units. This is in addition to his salary, which in 2020 was revealed to be $2 million annually.
Meta Platforms Inc. CEO Mark Zuckerberg and Snap Inc. CEO Evan Spiegel are both known to take symbolic annual salaries of $1. Compensation for both these leaders run in the millions from their stock-based options. Zuckerberg lost over $100 billion in value of his 13 per cent Meta stock in just over a year in 2022.
Snap stock also fell in 2022 leading to lower net worth for its founders, including Spiegel. In June 2022, Snap was down by over 70 per cent in one year.
Twitter Inc. CEO Elon Musk isn't required to report compensation now the company is privately owned.
Does it really matter?
"Whether these are PR moves or not, I think from the perspective of both employees and shareholders it's actually the right move for organizations," Tony Guadagni, a senior principal in the human resources group at consulting firm Gartner Inc. told Bloomberg.
"It's a tremendous message from leadership to say, 'This is going to hurt, and it's going to hurt me as well,'" Guadagni said.
An analysis report in Forbes said the CEOs accepting paycuts or freezing their own raises or pay to cover employee raises decreases turnover by up to 50 per cent. The report referenced a study by Vienna University of Economics and Business, which found that the paycut was as good as finding a new CEO. The researchers also found that financial performance had a tendency to rebound following the cuts.