Meta Cuts Employee Compensation Amid AI Spending Spree
Meta is reducing employee stock awards by 5% and has cut bonuses for the second consecutive year. The cost-cutting measures come as the company pursues a $130 billion capital expenditure vision for AI and data infrastructure. The move is intended to drive efficiency elsewhere in the business to fund the AI-focused splurge.
- The recent 5% reduction in employee stock awards follows a more significant 10% cut that occurred last year, sparking some internal backlash. - These cost-saving measures are part of a broader initiative CEO Mark Zuckerberg started in 2023, which he termed the "year of efficiency," leading to over 20,000 layoffs in the preceding years. - While cutting stock awards, Meta is simultaneously overhauling its performance review system to offer greater rewards to its highest-achieving employees, which may lead to an overall increase in the company's total compensation budget. - The company's AI spending is focused on building out massive data center infrastructure, including a deal for 6 gigawatts of nuclear power and deploying millions of Nvidia's Grace CPUs for AI inference workloads. - To attract and retain specialized AI talent in a competitive market, Meta has reportedly offered salaries up to $2 million and multi-million dollar bonuses, creating a stark contrast with the broader compensation cuts. - The AI capital expenditure for 2026 is projected to be between $115 billion and $135 billion, a significant increase from the $72.2 billion spent in 2025. - The investment surge is aimed at competing with rivals like Google and OpenAI in the race to develop advanced large language models and ultimately, artificial general intelligence. - In parallel with these cuts, Meta has conducted targeted layoffs in other divisions, including a 10% staff reduction in its metaverse-focused Reality Labs division, which has incurred over $70 billion in losses since 2021.
