Tech layoffs have dominated the headlines so far in 2023. Due to a challenging economic situation, companies like Salesforce, Microsoft, Amazon, Meta, and Google have all made large-scale job cuts.
Joining the list is Zoom. The video communications giant has shared it will be cutting 15% of its workforce (around 1,300 people) globally.
In a letter to employees, CEO Eric Yuan wrote: “As the world transitions to life post-pandemic, we are seeing that people and businesses continue to rely on Zoom.
“But 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, deliver for our customers and achieve Zoom’s long-term vision.”
According to Zoom’s latest financial report (for the third quarter 2023), revenue was up 5% year-on-year to $1.1 billion, but net cash flow was down compared to Q3 2022.
Impacted employees received the news by email, which Yuan admitted wasn’t the ideal approach. “I am sorry you are finding out this way but we felt it was best to notify all impacted Zoomies as soon as possible,” stated Yuan.
He added that laid off employees will “also receive outreach from a leader in your organization offering to have a one-on-one check-in should you want it; they are here to offer support during this transition”.
Zoom also offered impacted US employees up to 16 weeks salary and healthcare cover, the payment of their 2023 bonus (based on company performance), a stock option and outplacement support, including workshops and one-to-one coaching. A similar severance package is in place outside the US, but it is subject to local laws.
Yuan takes personal responsibility
What makes Zoom’s layoffs stand out is that the CEO is taking personal responsibility for the layoffs.
In the letter to employees, Yuan wrote: “As the CEO and founder of Zoom, I am accountable for these mistakes and the actions we take today– and I want to show accountability not just in words but in my own actions.”
As a result, he made the decision to reduce his salary by 98%, as well as foregoing this end of year bonus.
In addition, Zoom has decided that the rest of the executive leadership team will also forfeit their 2023 bonus, as well as reduce their base salaries by 20% in the next financial year.
According to Salary.com, Yuan’s base salary was over $300,000 in 2022 – and his bonus was $13,244. Therefore, this 98% cut will see his annual base salary decline by more than $290,000 to just over $6,000.
This is a very dramatic move by Yuan and demonstrates real empathy around job cuts. But he is not the only CEO taking a pay or bonus cut amid layoffs and economic uncertainty; other examples include Goldman Sachs’ David Solomon and Google’s Sundar Pichai.
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