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Reddit CEO addresses whopping $193M compensation package

Reddit CEO Steve Huffman explained his $193 million compensation plan in response to a user's inquiry in a Q&A session with the platform's community ahead of Reddit's IPO.

Reddit CEO Steve Huffman addressed his $193 million compensation amid backlash from the social media platform's volunteer moderators as the company nears its initial public offering (IPO). 

Huffman responded to a question posed by a Reddit user that asked how the company came to the conclusion that his compensation package was reasonable. The question comes after some of the social media platform's unpaid moderators expressed frustration at the CEO's compensation package given their importance to the site — which hosts forums for users to share, discuss and vote on content — despite being volunteers.

"I'm glad this question was asked because there's been a lot of commentary on this topic," Huffman said in a question-and-answer video on the platform. "So broadly, the way my compensation works is it has salary and stock. The board evaluates my performance and sets my compensation."

"The way that the board thinks about my stock ownership is as a percent ownership of the company. So while I am a founder of Reddit, I also sold my stake a long time ago and I was re-hired and have to re-earn my ownership. Today, I own about 3.2% of Reddit, but I have the opportunity to increase my ownership," he explained.

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"So why does it look like I got a big grant at the end of 2023? Because the board canceled most of my outstanding grants and then re-granted them," Huffman said. "They did this to simplify things for both the company and me, and align my performance with the company's performance."

He went on to say the stock component of his compensation has a staggered vesting schedule with some set to vest at the time of the company's upcoming IPO, while other portions of his stock compensation either vest at regularly scheduled intervals as time elapses or are linked to the company's valuation rising.

"Some of the stock vests at IPO, some vests over time, and some isn't worth anything until the value of the company increases — so if the company does well, I will do well, but if the company does not do well, I don't either," Huffman said.

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Reddit noted in a regulatory filing related to its IPO that its "approach to content moderation inherently subjects us to numerous risks." Among those risks is that Reddit could "be unable to retain a sufficient number of volunteer moderators, or ensure that our moderators will fairly and consistently enforce our rules, either of which could significantly degrade the community experience for other Redditors."

The company is setting aside 8% of the total shares on offer through its upcoming IPO for eligible users and moderators on the platform as an incentive for those members of the Reddit community. The stock set-aside is also open to certain board members and family and friends of the company's employees and directors.

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Reddit is set to price its IPO in New York on Wednesday as it seeks a targeted price range of $31 to $34 per share with a valuation of about $6.5 billion. The company is planning to raise up to $748 million with the sale of roughly 22 million shares.

Reuters reported that Reddit's IPO is between four to five times oversubscribed, citing sources familiar with the matter.

FOX Business' Breck Dumas and Reuters contributed to this report.

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