“Support the entire workforce”: Tech bosses are slashing their own salaries worth millions

“Support entire workforce”
Tech bosses are slashing their own salaries worth millions

The boom of the pandemic years is over. The tech giants in Silicon Valley are swinging the job club. Around 60,000 employees in the industry have already received their notice of termination. The bosses of Apple, Intel and Alphabet want to cushion the slump by tightening their own belts.

Apple boss Tim Cook did it, Intel boss Pat Gelsinger did it, as did Google parent Alphabet chairman Sundar Pichai. All three have announced in the past few weeks that they want to forego a large part of their salaries, which are worth millions, in order to give their companies more financial leeway. The party in Silicon Valley during the Corona years is over. High inflation and the threat of recession are making life difficult for the American technology industry, which has been spoiled by success.

Many companies are pulling out the red pencil to prepare for more lean years. More than 55,000 tech workers have already been evicted this year, including 12,000 at Google parent Alphabet, 10,000 at Microsoft and 11,000 at Facebook parent Meta, according to website Layoffs.fyi. In order to cushion the difficult situation, bosses of some tech giants have reacted.

Intel CEO Pat Gelsinger announced earlier this month that he would forego 25 percent of his base salary to cut costs and avoid layoffs after disappointing quarterly figures. Other executives in the group accepted cuts of between five and 15 percent on average. “These changes are intended to support investments and the entire workforce,” the Business Insider portal quoted a Microsoft spokesman as saying. The company is targeting $3 billion in cost reductions this year. Bloomberg predicted last October that thousands of employees could lose their jobs.

Alphabet CEO Sundar Pichai also said in early February that top executives at Google’s parent company were taking a “very significant cut in their annual bonus.” He did not reveal by how much or for how long the cuts will last. Shortly before, the company had laid off around 12,000 employees – around six percent of the workforce.

Apple CEO Tim Cook is also putting the brakes on costs. However, he makes a mark by starting with his own salary. As can be seen from documents filed with the US Securities and Exchange Commission, he voluntarily waived 40 percent this year – which still leaves him with a comfortable annual salary of 49 million US dollars. How much Cook actually collects for 2023 also depends on how his block of shares develops. Despite the disappointing numbers, the group wants to at least refrain from layoffs for the time being. “I see layoffs as a last resort,” quotes the “Wall Street Journal” Cook: “You can never say never. We want to control the costs as much as possible in other ways.”

Wave will also spill over to Europe

As a rule, tech companies justify their prank concert by saying that they grew too quickly during the pandemic and hired too many people. The dangers of inflation and recession are also mentioned. The mass layoffs are not exaggerated, says Maren Freyberg from the HR consultancy Dwight Cribb in an interview with “Capital”. Many companies would have to save. The reason is a “combination of costs and prospects”. Freyberg doesn’t think European companies will get away with it. The wave will continue to slosh. Europe is just lagging behind, she says.

SAP is the first well-known European tech company to lay off employees on a large scale. The flood of layoffs has also reached the market leader among music streaming services Spotify, which has announced that it will let around six percent of its employees go. The provider from Sweden wants to lay off around 600 employees. According to its latest annual report, the company had almost 10,000 employees worldwide. “I think there will be more. But it also depends on how the macro situation changes. And above all in Europe, that depends on the Ukraine war,” says Freyberg.

Olaf Groth, economics professor at the American University of Berkley, sees no major cause for concern. The pandemic caused a mega boom, he says in an interview with Deutschlandfunk. “The digital service providers accepted this wave fairly quickly.” However, he thinks it is an exaggeration to speak of a major crisis. Companies like Alphabet, Apple, Meta and Amazon had cash reserves in the billions and continued to make high profits.

source site-32