- Reddit CEO Steve Huffman discussed his compensation package in a video Q&A posted on the forum.
- The CEO’s $193 million pay package includes a mix of salary and stock.
- Reddit is targeting a $6.4 billion valuation as it moves to go public later this week.
Reddit CEO Steve Huffman has received backlash over his $193 million compensation.
Ever since word got out about Huffman’s pay, users on Quora, Reddit, and X have criticized the package. Some feel the amount is too high for a platform that doesn’t pay moderators or users — and for a company that hasn’t been profitable thus far.
“The feel good moment of simultaneously revealing your CEO is overpaid while your risk assessment underscores the important of unpaid moderators,” one user wrote in a discussion post about the topic on Reddit.
Huffman went on the platform he cofounded to defend his pay in a video Q&A.
“Look, I’m glad this question was asked because there’s been a lot of commentary on this topic,” Huffman said.
The CEO said his compensation is based on salary and stock, and Reddit board members set the amount based on his performance.
According to an SEC filing, Huffman got a salary of $341,346 in 2023, which is relatively low for a CEO of a major public corporation. In February, this was raised to $550,000. He also got a $792,000 bonus last year based on Reddit user numbers, revenue, and a type of profitability known as adjusted EBITDA that excludes certain expenses.
The bulk of his compensation package is now in restricted stock units and stock options. A lot of this compensation is based on Huffman staying at Reddit through late 2028, and some is triggered based on completing the IPO, according to the SEC filing.
Half of the stock options vest at $25.29, a relatively easy bar to reach. The other half only vest if Reddit shares reach $45, $60, and $90 in public market trading over 10 years, the SEC filing explains. That’s a higher bar and aligns the CEO’s interests with shareholders.
A “big grant” late last year
Huffman said in the video that his “big grant at the end of 2023” was a result of the board canceling existing stock awards and then granting him this new equity package.
“They did this to simplify things for both the company and me and align my performance with the company’s performance. Some of the stock vests at IPO,” the CEO added.
However, the SEC filing also states that some of Huffman’s previous performance-based RSU award was cancelled because the grants were “not providing the incentive initially intended.” Reddit went on to say that it cancelled many of the “PRSUs for which performance had not already been achieved.”
Huffman already owns Reddit stock
In addition, Huffman already owns about 3.2% of Reddit. The company is targeting a $6.4 billion valuation for its upcoming IPO this week. So the CEO’s stake will be worth about $200 million, even before his new equity compensation begins to kick in.
Reddit and its investors plan to sell 22 million shares and they are targeting an IPO price of $31 to $34.
Zuckerberg versus Elon
In contrast, Meta cofounder and CEO Mark Zuckerberg gets a $1 annual salary, and was awarded no bonus and zero equity awards in 2020, 2021 and 2020, according to Meta’s latest annual proxy filing.
Meta pays more than $20 million a year to cover Zuckerberg’s security and use of a private jet. And, of course, he owns a major stake in the company, so if his performance improves, Meta shares should rise, making him more wealthy. The company also started issuing dividends, which means Zuckerberg collects hundreds of million of dollars a year from those payouts.
Elon Musk is on the other end of the spectrum. His pay package at Tesla was valued at more than $50 billion. A Delaware judge recently struck down this compensation.
Huffman’s chances of getting even richer
Back at Reddit, it’s unlikely that Huffman will get $193 million in compensation. That’s an estimate the company has to make for regulatory and disclosure purposes. It’s based on the estimated fair value of the package on a certain date.
His new RSUs vest in installments through late 2028, and the stock options can be exercised over 10 years, but only if Reddit shares hold up and then go higher.
Either way, Huffman is already incredibly wealthy and has a chance to become even richer as Reddit goes public.
