In the year 2023, cash will reign supreme for executives in the technology industry Last year, tech companies spent a lot of time figuring out how to keep their employees happy and calm while cutting perks and letting people go. Now, insiders say they think companies will offer more stock and cash bonuses to keep their C-suites together.
In 2020 and 2021, the sudden shift to digital caused by the pandemic was good for the top tech stocks. But when 2022 came around, things changed. Stock prices went down.
Insiders say that in 2023, tech companies will try to make long-term deals with payouts for staying on the job as a way to keep their executives loyal.
Apple, Microsoft, Alphabet, Amazon, and Meta, five of the biggest tech stocks, lost a total of $3.7 trillion in value in 2022. Not only does a falling stock hurt the shareholders, but it also hurts employees who get some of their pay in the form of stock. Tech companies gave their employees more shares to make up for the fact that their stock lost value last year, which made investors worry about future returns.
Other companies, like Shopify and Netflix, decided to give their employees more control over their pay packages by letting them choose how much of their salary is in cash and how much is in stock each year.
Deepali Vyas, a top headhunter at Korn Ferry, told Insider that executive cash compensation will be adjusted down to a level that reflects how companies are valued right now.
“I would like to see those levels go down by 10–20%,” she said.
As the Federal Reserve continues to raise interest rates to fight inflation, company boards of directors and shareholders will have to come up with creative ways to pay scared employees, including leaders, who are seeing their tech-boom benefits cut back and taking on more work because people have been laid off.
Vyas added that competitors both inside and outside of the tech industry were ready to hire talented people from Big Tech at a more realistic but still competitive price.
Vyas said that now is the worst time to lose top-tier talent like a hard-working executive, so she thinks that companies will come up with long-term, metric-based incentives that pay out cash or stock in a few years or more.
Aalap Shah, a managing director at the consulting firm Pearl Meyer, said that companies will look at how much power they have over each person they want to keep to figure out how much money they can promise them for staying.
Shah told Insider, “Looking at their unvested equity holdings and figuring out what their current value is gives you an idea of how much value the executive is being kept on for and if that is a meaningful enough value.”
Even if a tempting job market opens up in a few years, it might be better for executives who meet that bar to stay put.