Meta Slashes Employee Stock Grants for Second Year as AI Spending Surges

Meta Slashes Employee Stock Grants for Second Year as AI Spending Surges

Meta Platforms has reduced stock-based compensation for employees for the second consecutive year, according to people familiar with the matter, as the social media giant redirects resources toward artificial intelligence infrastructure and cost management.

The cuts mark a continuation of the company's equity compensation pullback that began in 2024, when Meta first trimmed stock awards amid broader efforts to improve operational efficiency. For finance leaders watching Big Tech's compensation strategies, the move signals how even cash-rich companies are recalibrating their talent retention playbook as AI capital expenditures balloon and investor scrutiny on margins intensifies.

Stock-based compensation has long served as Silicon Valley's preferred currency for attracting and retaining engineering talent, allowing companies to preserve cash while offering employees upside tied to company performance. Meta's decision to reduce these awards two years running suggests a fundamental shift in how the company is balancing talent costs against other strategic priorities—particularly its massive investments in AI computing infrastructure and data centers.

The timing is notable. Meta has been among the most aggressive spenders on AI capabilities, with CEO Mark Zuckerberg committing tens of billions to build out the company's AI infrastructure. That spending has drawn questions from investors about returns on investment, even as Meta's core advertising business remains profitable. Reducing stock compensation offers one lever to manage overall operating expenses while maintaining the capital intensity required for AI development.

For employees, the practical impact is straightforward: less equity means lower total compensation, assuming base salaries haven't increased proportionally to offset the cuts. In a tight labor market for AI and engineering talent, that creates a potential retention risk—though Meta's brand and scale still give it advantages in recruiting.

The broader pattern here is worth watching. If Meta's approach becomes standard practice across Big Tech, it could reshape compensation benchmarking for finance teams across industries. Stock-based comp has historically been treated as a somewhat abstract expense by many companies, but as equity markets fluctuate and dilution concerns grow, CFOs are increasingly scrutinizing these programs with the same rigor they apply to cash compensation.

What remains unclear is whether Meta is making these cuts from a position of strength—confident enough in its competitive position to reduce equity incentives—or whether this reflects genuine pressure to control costs as AI investments strain even Meta's substantial cash flows. The answer likely matters for how other finance leaders should interpret the signal.

The move also raises questions about how Meta is managing the trade-off between short-term expense management and long-term talent retention, particularly in AI-related roles where competition for skilled workers remains fierce. Stock compensation cuts that save money today could create recruiting headwinds tomorrow if competitors maintain more generous equity packages.