In a significant shift regarding employee compensation, Salesforce has decided not to award raises this year to those at the director level and above, as detailed in an internal communication reviewed by Business Insider. The email from the human resources team indicated that the company aims to concentrate merit increases at the Senior Manager level (grade 8) and lower, suggesting a strategic pivot in its compensation approach.
Instead of traditional salary raises, Salesforce plans to enhance stock and bonus allocations for its top-performing senior employees. The email referred to this adjustment as part of an “investment in performance and long-term growth,” emphasizing a focus on incentivizing high achievers within upper management. Employees will have the opportunity to review their compensation during expected performance evaluations, which are scheduled to begin at the end of March.
This move at Salesforce may reflect a broader trend among major technology companies to rethink compensation for senior staff. Rather than increasing base salaries, companies are increasingly linking pay to stock performance, allowing them to conserve cash while still rewarding leadership talent. Meta, for instance, recently introduced a new incentive structure based on stock options for several C-suite executives.
In a challenging market context, Salesforce’s stock has seen a substantial decline of approximately 37% over the past year. CEO Marc Benioff has sought to quell concerns about artificial intelligence’s potential impact on software-as-a-service companies, amid a wave of selling pressure affecting stocks in the sector.
According to the internal email, there has been a 10% increase in the number of directors and senior directors receiving stock grants, alongside a rise in the average value of these grants. Notably, 80% of directors and senior directors who achieved “highly successful” or “exceptional” performance ratings received stock grants that were 20% to 40% larger than the previous year. The bonus pool for these roles is currently funded at 103%, with most eligible individuals receiving at least 100% of their bonuses. Top performers, in particular, secured between 115% and 140% of their bonuses.
Earlier this year, as part of restructuring efforts, Salesforce laid off a portion of its workforce, impacting fewer than 1,000 employees. Concurrent with these cuts, the company appointed six new leaders, filling the gaps left by five prominent executives who had recently departed.
This recalibrated compensation strategy reveals Salesforce’s approach to navigating the current economic landscape while aiming to motivate its leadership through targeted incentives.
