Zoom CEO takes 98% pay reduction after cutting 15% of workforce

Productivity software firm Zoom will fire 15% of its global workforce in a cost-cutting measure, as senior figures in the company are set to accept salary cuts.

Zoom founder and CEO Eric Yuan has stated that he will cut his yearly pay by 98%, and will not take a bonus in a move to show his responsibility for the cuts. Executives at Zoom will also see a 20% reduction in salary and forgo their corporate bonuses.

The company will give the 1,300 outgoing employees up to 16 weeks’ salary and healthcare coverage, as well as restricted stock units (RSU) and stock option vesting. The latter will last for six months for US employees, and until 9 August 2023 for those outside the US.

“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,” Yuan said in a message sent to employees.

“We worked tirelessly and made Zoom better for our customers and users. But we also made mistakes. We didn’t take as much time as we should have to thoroughly analyse our teams or assess if we were growing sustainably, toward the highest priorities.”

Yuan's decision to only accept a 2% salary for the year is unusual, especially as he has also refused to accept a bonus.

As CEOs and executives receive the majority of their compensation through corporate bonuses, the message serves as a significant demonstration of the seriousness with which Yuan and other officials take responsibility for the cuts.

US employees were told to expect an email to their company inbox titled ‘[IMPACTED] Departing Zoom: What You Need to Know’ if they were included in the cut, while those outside the US were told according to local regulations.

Zoom has also stated that it will help fired employees to seek new roles elsewhere, and offer them 1:1 workshops, coaching, and networking opportunities.

Zoom's pandemic boom

Questions have long been raised about Zoom’s long-term future as a company. Following its meteoric rise driven by pandemic remote working, the firm reported its first billion-dollar quarter in August 2021.

But its path to profit was often unclear and moves to monetise the platform using advertisements have not succeeded in maintaining the company’s growth trajectory.

In September 2022, it was reported that Zoom will release email and calendar apps, adding to the company’s place as a productivity giant.

This would put it directly in competition with other productivity suites such as Microsoft Teams and Google Workspace, a step up from the company’s focus on video conferencing.

Zoom’s Q3 earnings showed 5% revenue growth year on year, with a strong base of 210,000 enterprise customers that grew 14% over the same period driving much of this. It has projected total Q4 earnings of around $1.1 billion (£910 million), up from $1.07 (£880 million) year on year.

The method by which Zoom employees have been notified is similar to that taken by Twitter following its acquisition by Elon Musk, which saw 50% of employees laid off.

Those made redundant were told via an email to their personal inboxes, while those chosen to stay were informed through an email sent to their work address.

However, some discovered early as they had lost access to their company Gmail accounts, while others had laptops remotely wiped in advance of receiving formal notice of redundancy.

Zoom was notably used in 2021 by US mortgage startup Better.com as a platform through which to fire 900 employees. CEO Vishal Garg had hosted a company-wide call just prior to Christmas, in which all attendees were informed of their termination effective immediately.

The communications firm is the latest in a series of high-profile tech firms to engage in layoffs and cuts to employee benefits. Amazon and Salesforce fired a combined 26,000 employees in January 2023, while Google reduced its workforce by 12,000.

Facing poor financials, Intel has also slashed salaries throughout the company in place of wider cuts.

CEO Pat Gelsinger could cut his salary by 25%, compared to 5% cuts faced by mid-level staff. The chip giant has lost ground to its rival Advanced Micro Devices (AMD), hurting its bottom line at a time when device sales have plunged.