Monday seeks to double CEO pay weeks after announcing 620 layoffs
Shareholders will vote on raising compensation for founders Roy Mann and Eran Zinman to about $14 million each despite the company's workforce cuts and falling share price.
Executive pay often behaves like supermarket prices: there is always a reason to increase it, but even when there are compelling reasons to reduce it, that rarely happens.
On Thursday, shareholders of software company monday.com will vote on a proposal to nearly double the compensation of the company's co-founders and co-CEOs, Roy Mann and Eran Zinman. Under the proposal, each executive could receive compensation worth up to roughly $14 million annually, compared with approximately $7.2 million since 2021.
On paper, the rationale appears convincing. Since its IPO in 2021, Monday has delivered impressive operating performance. Annual revenue has grown from $308 million to $1.2 billion, while the company has become one of Israel's largest enterprise software businesses. According to monday, its financial performance now ranks in the upper percentiles of comparable software companies, while its CEO compensation remains in the lower percentiles of publicly traded peers because it has not been materially updated since the company's IPO.
Yet reading the company's detailed justification, it is easy to overlook two inconvenient facts. Monday's market capitalization has fallen by about 50% from its IPO valuation, and just two weeks ago the company announced plans to lay off 620 employees after warning of growing uncertainty surrounding the impact of artificial intelligence on its business.
The company's past achievements are not in question. The issue is timing. Investors are increasingly focused on whether monday can repeat its success in a software industry being reshaped by AI. The decision to undertake its largest workforce reduction to date, after management had repeatedly insisted such a move was not under consideration, illustrates how seriously it views the competitive threat posed by AI-native enterprise software.
Under the proposed compensation package, the fixed salary component would increase only modestly. The monthly base salary for each CEO would rise by 19% in 2027 to NIS 110,000 ($36,100), followed by annual increases of 5%, reaching NIS 115,000 ($37,800) in 2028 and NIS 120,000 ($39,500) in 2029. According to monday, even after these increases, base salary would remain around the 25th percentile of its peer group.
The annual cash bonus structure would remain unchanged. Each CEO would continue to be eligible for a target bonus equal to 100% of annual salary, rising to as much as 200% if performance substantially exceeds targets set by the board's compensation committee.
The real increase lies in equity compensation.
Monday is proposing to raise annual equity awards for each CEO from roughly $7 million today to as much as $9.5 million in 2027, $13 million in 2028 and $13.65 million in 2029, bringing compensation closer to the median among comparable U.S. software companies.
The company also wants to adjust the structure of those awards so that 60% would be performance-based and 40% time-based, compared with today's 70%-30% split. Monday argues that while the proposal aligns more closely with market practice, it would still place greater emphasis on performance than many peers, where equity awards are often split evenly between performance- and time-based vesting.
Mann remains one of monday's largest shareholders with an 11.5% stake, while Zinman owns 4.1% of the company. The board that approved the proposal includes Insight Partners Managing Director Jeff Horing, whose firm is monday's largest shareholder; Entrée Capital co-founder Avi Eyal, one of the company's earliest investors; and Wix CEO Avishai Abrahami, who serves as an independent director.
