Meta Slashes Employee Stock Grants Again as Zuckerberg Doubles Down on AI Spending

Meta Slashes Employee Stock Grants Again as Zuckerberg Doubles Down on AI Spending

Meta has reduced stock-based compensation for employees for the second consecutive year, according to a Financial Times report published today, marking an unusual pullback in equity awards even as the company pours billions into artificial intelligence infrastructure.

The cuts come as Meta navigates a delicate balancing act: maintaining one of tech's most aggressive AI buildouts while managing investor expectations around profitability. For finance leaders watching the company's compensation strategy, the move signals how dramatically Silicon Valley's talent retention playbook is shifting in the AI era.

Stock grants have long been the golden handcuffs of tech compensation—the mechanism that kept engineers at their desks through market downturns and kept dilution creeping into earnings per share calculations. Meta reducing them two years running suggests either supreme confidence in its competitive position or a fundamental recalculation of what it takes to retain talent when everyone's hiring for the same AI skillsets.

The timing is notable. While Meta hasn't disclosed the specific reduction percentages, the company is simultaneously expanding headcount in AI research and infrastructure teams. That creates an interesting math problem: if you're hiring more people but giving each person less equity, you're either betting that cash compensation alone will suffice, or you're planning to be more selective about who gets the premium packages.

For CFOs at other tech companies, Meta's approach offers a test case in compensation strategy during capital-intensive transformation. The conventional wisdom held that you couldn't compete for AI talent without eye-watering equity packages. Meta appears to be testing whether brand strength and project scope can substitute for some of that equity premium.

The reduction also reflects a broader recalibration in tech compensation following the 2022-2023 market correction. When stock prices were climbing relentlessly, generous equity grants felt costless—they motivated employees and the expense was buried in non-GAAP adjustments that investors largely ignored. But with Meta's stock now trading with more volatility and investors scrutinizing every dollar of AI spending, equity compensation has become a more visible line item in the profitability equation.

What makes this particularly interesting is the signal it sends about Meta's confidence in its stock performance. Cutting equity grants only makes strategic sense if you believe your stock price won't dramatically outperform—otherwise you're creating retention risk as employees watch their reduced grants appreciate. Either Meta's internal forecasts are more conservative than its public AI enthusiasm suggests, or management believes the company's competitive moat is strong enough that employees won't jump ship over smaller equity packages.

The move also raises questions about how Meta is segmenting its compensation strategy. Are AI researchers still getting premium packages while other functions see cuts? The company hasn't broken out those details, but the answer would reveal whether this is broad belt-tightening or strategic reallocation.

For finance leaders, the broader lesson is about the shifting economics of talent retention in an AI-driven market. If Meta—with its resources and brand—is pulling back on equity, it suggests the industry may be moving past the "pay whatever it takes" phase of the AI talent war and into something more sustainable. Or it could simply mean Meta is making a very expensive bet that it's already won.