Facebook’s parent company Meta has given the green light for substantial increases in executive bonuses. The move coincides with ongoing workforce reductions and ambitious investments in artificial intelligence.

In a Securities and Exchange Commission filing dated 13 February, Meta disclosed that its Compensation, Nominating, and Governance Committee had approved a significant raise in performance-based bonuses for top executives, excluding CEO Mark Zuckerberg.

The revision elevates the bonus ceiling from 75% to 200% of base salary, with the changes taking effect from Meta’s 2025 annual performance cycle.

The committee justified the decision by noting that the company’s executive compensation lagged behind its industry peers.

Meta’s top executives were previously positioned at or below the 15th percentile in terms of total cash compensation when compared to similar roles in competitor firms.

With the revised bonus structure, however, their earnings now align with the 50th percentile of this benchmarked peer group.

Tougher performance standards and workforce reductions

The generous payout package comes on the heels of Meta’s decision to cull 5% of its workforce based on performance evaluations.

In a company-wide memo, Zuckerberg emphasised a push for greater accountability, stating: “I’ve decided to raise the bar on performance management and move out low-performers faster.”

Traditionally, underperforming employees were phased out gradually over a year, but Meta now plans to conduct more frequent performance-driven layoffs throughout the year.

The company said it aims to achieve a 10% non-regrettable attrition rate before the close of its current performance cycle, with half of this target already met in 2024.

Adding to the shakeup, Meta has reportedly reduced its stock option distributions by about 10% for thousands of employees.

The impact of these cuts varies depending on an employee’s location and role within the company, according to the Financial Times.

Also Read: Meta is the 'cruelest tech company,' workers say

Investor confidence remains high

Despite internal restructuring, investor sentiment toward Meta remains bullish. The company’s stock has surged nearly 14.8% since the start of the year and has climbed over 47% in the past 12 months.

The rally reflects market optimism about Meta’s stronghold in digital advertising and its high-stakes foray into AI.

Meta’s Q4 2023 earnings report further reinforced this confidence, revealing a robust 21% year-over-year revenue increase, reaching US$48.39 billion.

This growth underpins the company’s ability to navigate turbulent waters while continuing to scale its operations.

Are Meta's big bets on AI paying off?

Zuckerberg has made it clear that AI is Meta’s next frontier. The company is set to inject up to $65 billion into AI-driven initiatives in 2025. 

The CEO envisions the coming year as a turning point, asserting in a Facebook post that Meta AI will evolve into the leading assistant serving more than 1 billion people. 

Zuckerberg also anticipates that Llama 4 will become the leading state-of-the-art model, and that Meta will “build an AI engineer that will start contributing increasing amounts of code to our R&D efforts”.

Lessons for HR professionals: Compensation, performance and morale

Meta’s latest moves present a paradox. While slashing jobs and tightening stock option grants, the company is simultaneously boosting executive pay.

The decision raises questions about corporate priorities, particularly in an era where talent retention and employee morale are crucial for sustaining innovation and operational efficiency.

For HR and business leaders, there are several key takeaways. For one, Meta’s move signals a trend towards heightened performance management.

HR teams work to ensure their organisations have clear and fair performance evaluation systems to avoid unintended consequences such as diminished morale or loss of key talent.

Benchmarking pay against industry peers is also crucial, but it must be balanced with broader workforce expectations.

Ensuring equitable compensation at all levels can prevent resentment and disengagement among employees.

Also Read: Meta job cuts: Hurting high performers sparks a crisis of trust

Meta continues to clash with former staff

Meta is right in the thick of its highly criticised large-scale layoffs tied to employee performance, and a few perceived missteps have shaken its company culture to the core.

Often, transparent communication and support are vital to maintaining trust and engagement within the workforce during moments of heightened tension.

This, however, appears not to be the case with Meta.

Laid-off employees have spoken out against the company’s purported lack of honesty and integrity in its handling of the recent performance-based job cuts.

Overall, Meta’s cost-cutting strategy serves as a cautionary tale for HR professionals confronting the issue of executive pay, workforce expectations, and AI-led transformation.

The new financial year will thus be a litmus test for businesses regarding how well they manage leadership incentives with workforce sustainability.