The $1.7 trillion social media giant disclosed a sweeping round of executive compensation awards to five of Meta’s most-senior executives last month. Each exec got seven tranches of stock options with exercise prices ranging from $1,116 to $3,727 per share. With Meta’s stock currently trading at $671.34, the stock price would have to climb 66% to hit even the lowest level. To get to the highest rung, at which the final tranche of options would become profitable, Meta would need to reach a market capitalization of $9.46 trillion. No company in history has ever hit that market cap, which is nearly twice the size of $5.3 trillion Nvidia, currently the world’s most valuable company. 

The Meta board, chaired by CEO and founder Mark Zuckerberg, granted the options to a select group including chief technology officer Andrew Bosworth, chief product officer Christopher Cox, chief financial officer Susan Li, chief legal officer Curtis Mahoney, and president and vice chairman Dina Powell McCormick. If the stock price reaches the uppermost ceiling in the award, the options would be worth $625,592,443, according to Equilar figures cited by The New York Times. Including restricted stock unit grants that went to some of the executives, the combined payouts would range from $787 million to $921 million.

The board granted the awards to a deliberately selective group that Meta believes is critical to its AI ambitions. The aggressive strike prices on the options signal that Meta sees AI as a massive opportunity and that the market for talent in AI has intensified to the point Meta needed to level up its compensation plan. 

Zuckerberg collects a $1 salary at Meta, although the company pays his personal security expenses, which were $25.1 million last year. He holds a stake in the company valued at roughly $230 billion. Zuckerberg was not included in the most recent grants of awards. 

Ken Mahoney, CEO of retirement planning and investment firm Mahoney Asset Management, said in a note that the stock option awards are linked to “extreme upside scenarios into the future, such as if Meta were to become the most valuable company of all time, which would have to surpass some of the other tech giants.” 

“These are good moves for talent retention, and they cost nothing upfront,” wrote Mahoney. “It is a good way to align some incentives with moonshot outcomes, but we have to remember this $9.46 trillion number is more than a 5x of current valuations, and realistically, it’s not something that would play out any time soon. Of course, they know this too.”

Meta’s lofty ambitions in AI come as the company continues to play catch up to rivals Anthropic, OpenAI, and Google, all of whom currently have AI models available that are considered more advanced than Meta’s offerings. Last year Meta went on a high-profile and high-priced hiring spree, paying $14.3 billion to invest in ScaleAI and bring cofounder Alexandr Wang in-house, but the effort has yet to pay off.

Meta is also contending with an order this week to unwind its $2 billion acquisition of Manus, a Chinese-founded AI startup that had relocated to Singapore. The move will be a logistical headache, given that Manus employees have already joined Meta’s AI team and early investors have all cashed out.

Meta Q1 Earnings

When Meta reports earnings on Wednesday, along with Alphabet, Amazon, and Microsoft, their performances will offer a read on consumer health and “the extent to which the Middle East conflict has impacted advertising budgets,” wrote John Belton, a portfolio manager at Gabelli Funds, in a note. If the Iran conflict continues, it risks “derailing” the strong growth the ad platforms have been reporting as AI has improved engagement. 

Mahoney said that ongoing uncertainty over Meta’s return on investment from its massive capital expenditures will be top of mind for some investors.

“This is what the market keeps getting hung up on, and we think if they guide capex higher than what is estimated, then it could be an issue for the stock’s reaction,” Mahoney wrote.

Analysts expect Meta to report Q1 revenue near $55.5 billion, up roughly 31% year-over-year, and in the middle of the $53.5 billion to $56.5 billion range that the company guided to. Analyst expect earnings of $6.68 per share, according to AlphaSense Visible Alpha.