In June 2020, Zoom had just finished the craziest quarter of its business. While some companies had handed out office stipends or extra time off, Zoom took it a step further. Last summer it gave every employee a special stock grant, with the exception of Zoom's CEO Eric Yuan, who declined the award.
For U.S. employees, the value was worth roughly $63,000, according to an SEC filing. But thanks to Zoom's stock boom as the pandemic dragged on, the value of those shares has nearly tripled, and are worth around $171,000 today.
The goal of the special stock grant was to reward employees who had been under intense pressure during the pandemic, and also to convince them to stick around during a critical time for the business, the SEC filing states.
At the time, the value of the 450 shares granted to U.S. employees was around 60% of U.S. employees' average base salaries, the company said in filings. (Other Zoom geographies received different numbers of shares.)
But Zoom's stock has been on a tear as the videoconferencing company saw tremendous growth in 2020 and became a household name during the pandemic. Its stock price reached a peak of around $568 in October 2020 before settling around $380 for the last few weeks. And with the ballooning stock price, the retention award bonus has swelled too.
In the U.S., Zoom gave out 450 RSUs, or restricted stock units, to employees. Unlike options, which give employees a right to buy stock for a lower stock price, RSUs convert to shares whenever certain conditions are met. As part of the Zoom bonus terms, the stock vests over two years in two chunks, so employees had to have stayed through this past June to get the first half of the 450 shares, and will need to remain with Zoom until June 8, 2022 for the second half. So last month, U.S. employees at Zoom who had stuck around for a year received the first tranche of 225 shares from the award, valued on June 8 at around $76,000 — more than the entire award's initial target value.
It's a unique form of "golden handcuffs" to incentivize that workforce to stick around, while also being a tremendous reward for those who did. Retention bonuses aren't uncommon in the tech industry, but they're typically targeted at specific executives or toward employees after an acquisition so they stick around at the new company. For example, when Walmart bought Jet.com, Marc Lore reportedly received RSUs worth more than $250 million, but the five-year vesting schedule was backloaded so that it only vested 10% in the first year compared to 30% in five. (He lasted 4 and a half years before leaving in January 2021.) When Facebook executive Chris Cox rejoined as its chief product officer, the company awarded him an extra $4 million on top of his $69 million signing bonus to stick around for a year.
What makes the Zoom award unique is that it wasn't just about convincing employees to stay, but to reward them for keeping the world connected at the start of the pandemic. The bonus was meant as a thank you to the employees, and in the end, the Zoom bonus was worth a lot more than the average home office stipend or days off most tech companies gave out.
