Communications firm Zoom announced plans to lay off more than 1,000 employees globally after a pandemic-fueled growth spurt and subsequent decline, with the chief executive announcing a 98 percent reduction in his salary.
Laid off workers in the United States will get restricted stock units (RSUs) and stock options vesting for six months. For non-U.S. employees, these benefits will exist through Aug. 9. RSU refers to an award of stock shares usually granted to employees as a form of compensation.
Pandemic Growth, CEO Salary Cut
Zoom grew rapidly during the COVID-19 pandemic as companies shut down offices and remote working became widespread, thus boosting the need for the firm’s videoconferencing solution.In his message to employees, Yuan says that the company grew three times its size in a period of 24 months during the pandemic to meet the rising demand.
But now in the post–pandemic world, workers have returned back to offices and employees are engaging in more in-person activities.
“The uncertainty of the global economy, and its effect on our customers, means we need to take a hard—yet important—look inward to reset ourselves so we can weather the economic environment,” Yuan said.
Yuan announced that he is reducing his salary for the coming fiscal year by 98 percent as well as foregoing his fiscal year 2023 corporate bonus. Members of his executive leadership team will take a 20 percent salary hit while also forfeiting their bonuses.
Yuan made more than $300,000 as salary for the fiscal year ended Jan. 31, 2022, according to The Wall Street Journal. He also made $13,000 as a non-equity bonus plan. Yuan is estimated to be worth $3.9 billion.
Positive Third-Quarter Revenues, Mass Job Cuts
The layoffs come even though Zoom posted positive results in the third quarter. The firm saw third-quarter total revenues of $1.10 billion, up 5 percent year over year. Enterprise revenue was at $614 million, up by 20 percent.The number of customers contributing more than $100,000 in trailing 12-month revenue had risen by 31 percent. Zoom reported third-quarter generally accepted accounting principles (GAAP) operating margin of 6 percent and a non-GAAP operating margin of 34.6 percent.
As of Jan. 31, 2022, Zoom had roughly 6,800 employees, up from 2,500 workers in 2020. Zoom is scheduled to reveal its fourth-quarter results on Feb. 27.
In its filing with the U.S. Securities and Exchange Commission (SEC) on Feb. 6, Dell Technologies declared that it intends to cut down its workforce by roughly 5 percent as the company faces an “uncertain future.”
According to employment analytics firm Challenger, Gray & Christmas, Inc., American companies announced laying off 102,943 in January 2022, which is more than twice the number of terminations in December and the largest number of layoffs since September 2020.