BuzzFeed is changing the way it compensates founder and CEO Jonah Peretti, who will now receive most of his pay package in stock, in addition to introducing new incentives for other top execs — a bid to persuade shareholders that the senior leaders will be better incentivized to turn things around at the struggling digital media company.
In an SEC filing Friday, BuzzFeed said Peretti’s annual base salary was immediately reduced from $325,000 to $115,000, “which approximates the median employee compensation for BuzzFeed and its peers.” That will also reduce the annual cash bonus for which Peretti is eligible (the target amount of which remains 100% of his salary). Meanwhile, Peretti was awarded options to purchase 414,000 shares of the company’s Class A common stock, 40% of which is intended to approximate the $210,000 reduction in Peretti’s salary and the remainder of which is intended to “align” his compensation “with the interests of shareholders.”
“With this compensation model, the team will only benefit from value creation thereby aligning with shareholders, as the executive team transforms the company and pushes the industry forward,” BuzzFeed said in announcing the change.
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Investors seemed encouraged by the move, as BuzzFeed’s stock rose more than 6% in morning trading to $2.32/share. But the stock is still well off its IPO highs December 2021, when it popped as much as $14.57/share before closing down 11% on the first day of trading. BuzzFeed’s original SPAC deal valued it at $1.5 billion; today, the company’s market capitalization is under $100 million.
It’s unclear the extent to which the executive compensation rejiggering can change BuzzFeed’s fortunes, amid the ongoing decline in its advertising revenue. Note that Peretti already owns a considerable chunk of BuzzFeed’s shares. As of March 11, 2024, Peretti owned 4,812,240 Class A shares of BuzzFeed stock (3% of the outstanding total) and 5,237,416 shares of Class B stock — giving him 64% voting control over the company.
For Q1 2024, BuzzFeed reported revenue of $44.8 million, down 18%, while net loss from continuing operations improved slightly to -$26.6 million, compared with -$29.4 million in the first quarter of 2023. For Q2, BuzzFeed expects overall revenue to be $44 million to $49 million, or 21% to 30% lower than second quarter of 2023, with adjusted earnings projected to be in the range of -$4 million to $1 million (flat year-over-year at the midpoint).
Amid its financial woes, earlier this year BuzzFeedsold Complex and laid off 16% of BuzzFeed’s remaining staffers. That came after BuzzFeed in April 2023 announced it wasshuttering its unprofitable BuzzFeed News division and laying off about 180 employeesacross the organization.
In addition to the options awarded to Peretti, the BuzzFeed board’s compensation committee granted an aggregate of 6,791,000 options to other executives and employees of the company. “The awards are designed to retain those employees, as well as aligning their interests directly to those of our stakeholders,” the company said in the SEC filing.
Peretti, in a statement about the change to the equity compensation model, said, “During inflection points, it’s best to organize ourselves like a startup, where we can act quickly, test, learn and grow. This compensation and incentive structure reflects our new organizational model as a leaner, faster, scrappier tech-first company.”
Peretti continued, “The internet goes through eras based on technological developments — first it was portals then search, then it was social, and now we’re entering the Gen AI era. A lot of value is created at the beginning of each cycle. We are already seeing the early benefits of AI adoption, and I believe the next three years will offer an opportunity for significant value creation. That is why we are organizing ourselves like a startup and incentivizing our team over the next three years accordingly. We designed this program to align with our goal of creating lasting value for our shareholders.”
