In the US tech sector, hiring the best employees requires more than just competitive base pay and free snacks. One of the more prized rewards is generous share-based remuneration. The tech stock rout is making these expensive for employers and investors.
In theory, share-based remuneration works because it keeps immediate wage costs down and motivates employees to help their employer succeed. The pay structure should align worker and investor interests. Many companies exclude the cost of stock-based pay from adjusted profit figures on the basis that it is a non-cash expense.
Tech share prices slumped during last year’s investor rotation out of growth equities. Meta’s share price is down 15 per cent over the past year. Alphabet has fallen 27 per cent. Video conferencing group Zoom is off 42 per cent. The value of employee payouts has accordingly dropped.