Meta diminishing bonus payments to employees: Report

Yahoo Finance’s Daniel Howley joins the Live show to discuss Meta’s cost-cutting efforts, which include reports of a cut in bonus payments for some employees.

Video transcript

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- Meta is cutting back on its decision to make bonus payments. The social media company is reportedly diminishing bonus payments to some employees and ramping up the frequency of its performance reviews, according to "The Wall Street Journal." Yahoo Finance's Dan Howley has the latest. Dan, why the reversal here?

DANIEL HOWLEY: Yeah, it's all part of Mark Zuckerberg's year of efficiency push. And so basically what's happening is they're going to do two performance reviews each year rather than one. And those employees that get-- and this is according to "The Journal"-- a met most expectations rating will see their bonus multiplier from 85% to 65%. So they'll be taking a hit financially if they get that kind of rating compared to what they would have gotten perhaps in prior years.

And this comes after the company had previously decided to give a number of more employees lower reviews, basically telling them that they were meeting expectations or more or less kind of riding the line there. That was basically a way to push employees out the door as they were looking to cut back on headcount.

Now, remember this comes after Meta laid off 11,000 workers in November and then 10,000 workers this past month, so 21,000 workers in total. They also decided that they weren't going to hire 5,000 open spots of employees. So they're really cutting back here a great deal. They're trying to get a hold on spending.

This is something that they've been doing to please shareholders, obviously, because the company has just been hemorrhaging money through that metaverse initiative. They spent $10 billion in 2021, $13 billion in 2022. And it's expected to increase from there, though what they said in their last earnings call was that they're cutting back on CapEx compared to what their prior expectations or their prior guidance was for that. So it's all really part of Mark Zuckerberg's plan to try to cut back on spending, eliminating managers, they say flattening the org structures, something that he keeps saying. But that basically means we're getting rid of jobs.

- Hmm. And speaking about another company that has cut way, way, way back and is now trying to figure out what to do to make money, Twitter, it's making headlines. Elon Musk tweeted that only verified accounts will be recommended on the platforms For You feed. That starts on April 15. In other words, we got to pay to play situation.

DANIEL HOWLEY: Yeah, exactly. And that's something that, I think, for most users, they're going to just shrug their shoulders and go, OK? I think that's mostly for institutional users, celebrities, perhaps influencers, things along those lines, because those are the people that really want to get their tweets recognized by the broader public. For me, look, I just want people who follow me or people who follow them to be able to see what I post, which is normally just dumb stuff or my articles, which is great stuff.

But I think that this is something that-- it's another push by Elon Musk and Twitter to just try to get revenue sources outside of the advertising arm. They are, obviously, offering Twitter Blue. That's a way for them to get people to want to sign on to get the check mark, to get text-based two-factor authentication, to be able to tweet longer tweets and edit for a certain amount of time longer.

And so it's part of the overall effort for him to not have to rely on advertising, which has taken a hit. Advertisers started to leave the platform when he took over. They're not sure if they want to return. Twitter has been trying to sweeten the pot for them, offering free advertising to a degree or reduced pricing on advertising.

So this is something that I think we're going to continue to see these kind of different schemes that he might be able to put together to try to bring in more revenue. And don't forget, the value of the company was cut from $44 billion to $20 billion, according to recent reports. So we'll just have to see how this all works its way out. If it works, maybe he'll decide that, oh, there are other ways to generate better revenue outside of just needing advertisers.

- Right. Exactly. Well, $250 billion valuation, here we come. Right, Dan? Thanks so much for breaking all this down for us. Appreciate it.