Zoom, the video conferencing company that became a household name during the Covid-19 pandemic amid the uptick in remote working, is laying off 1,300 employees, or about 15 per cent of staff as the technology industry continues to cut back on a hiring surge during the global health crisis.
Zoom’s founder and chief executive Eric Yuan said the world continues to transition to life post-pandemic and that people and businesses continue to rely on the video conferencing company but also cited the uncertainty of the global economy.
"Its effect on our customers, means we need to take a hard – yet important – look inward to reset ourselves so we can weather the economic environment, deliver for our customers and achieve Zoom’s long-term vision," Mr Yuan said in a statement.
After growing three times in size within 24 months to manage demand during the pandemic, Zoom's layoffs, announced late Tuesday, will affect all departments across the company, he said.
"I know this is a difficult message to hear, and certainly not one I ever wanted to deliver. If you are a US-based employee who is impacted, you will receive an email to your Zoom and personal inboxes in the next 30 minutes that reads [IMPACTED] Departing Zoom: What You Need to Know," Mr Yuan said.
"For those Zoomies waking up to this news or reading this after normal work hours, I am sorry you are finding out this way but we felt it was best to notify all impacted Zoomies as soon as possible."
Zoom's share price is up about 27 per cent since the start of this year after falling about 41 per cent over the past year. It gained about 10 per cent at the close of trading on Tuesday to $84.66.
The layoffs follow similar cutbacks at Big Tech companies that have shed thousands of jobs amid rising interest rates aimed at reducing inflation and growing fears of a recession in the US.
After a hiring frenzy following the onset of the Covid-19 pandemic, as a result of the pivot to digitalisation, companies such as PayPal, Spotify, Meta, Amazon, Microsoft, Twitter, IBM and Google's parent Alphabet have fired thousands of employees.
As part of the company's restructuring Mr Yuan said he will take a 98 per cent pay cut and will be forgoing his corporate bonus for the company's fiscal 2023 year.
Mr Yuan earned $1,115,089 in total compensation last year, according to proxy statements filed for the 2022 fiscal year. Of this total $301,731 was received as a salary, $13,224 was received as an incentive bonus and $800,134 came from other types of compensation.
Mr Yuan has 19,265 unexercised stock options that are exercisable at a $4.15 share price by September 24, 2023, in addition to 23,560 exercised options that are unexercised at the same value. He also has 113,425 unexercised stock options that are exercisable at a $3.77 share price by September 24, 2023. All of the aforementioned options were granted in 2018.
In the event of termination or change of leadership that dislodges Mr Yuan from his position as chief executive, he stands to earn about $12.7 million in severance pay, according to the proxy statements. His net worth as of February 8 has increased about 8 per cent to $4.1 billion, according to Forbes estimates.
"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," he said.
Zoom's executive leadership team will also take a 20 per cent cut in their base salaries for the coming fiscal year and also forfeit their corporate bonuses.
In November, Zoom’s net profit attributable to common stockholders plunged 86 per cent in its fiscal third-quarter to $48.4 million, from the same period a year earlier.
While companies in the US let go of 363,824 jobs in 2022, 13 per cent more than in 2021, the technology sector was the leading job-cutting industry last year, according to Chicago-based global employment company Challenger, Gray & Christmas.
A total of 97,171 jobs were cut in the technology sector last year, a 649 per cent increase from 2021 — the highest since the dot-com crash that began in 2000, a survey by the company showed.
Last week, the International Monetary Fund changed course and raised its global economy outlook estimate for the first time in a year, projecting that the world economy will expand by 2.9 per cent this year.
The US, the world's largest economy, is now set to avoid a recession and is projected to grow 1.4 per cent in 2023, after growing 2 per cent last year and 5.7 per cent in 2021.
