Zoom CEO Eric Yuan to take 98% pay cut to meet demand

Zoom CEO Eric Yuan to take 98% pay cut to meet demand

Demand for the company's video-conferencing services slows with the waning of the Pandemic, so Zoom is cutting 1,300 jobs.

Eric Yuan, the chief executive officer, said he would take a pay cut of 98% for the coming fiscal year and forgo his bonus when he announces the layoffs on Tuesday.

We worked tirelessly but we also made mistakes. Yuan said we didn't take as much time as we should have to thoroughly analyze our teams or assess if we were growing sustainably, toward the highest priorities.

According to a regulatory filing on Tuesday, the company will incur about $50 m to $68 m in charges related to the layoffs. The company said a large part of it will be spent in the first quarter of fiscal 2024.

The company, which became a household name due to the popularity of its video-conferencing tools, has seen its revenue growth slow, and profits have fallen 38% in 2022, according to the estimates.

I would say incrementally, maybe this is telling us that we shouldn't expect reacceleration on the revenue side in the near term, but we could see additional upside to margins for a company that is already profitable, said Rishi Jaluria, RBC Capital Markets analyst.

During the pandemic, Zoom had bumped up hiring to meet demand, but now joins US companies in reining in costs to prepare for a possible recession.

Thousands of companies have laid off thousands this year to ride out of a downturn in demand caused by high inflation and rising interest rates.

The video-conferencing software maker said that its executive leadership team will reduce their base salary by 20% in the same period.

The departure employees will get 16 weeks of salary, healthcare coverage, and a bonus for the year, Yuan said.