Steve Huffman, CEO of Reddit, has faced criticism following the disclosure of his $193 million compensation package. The sizable sum has stirred debates among users on various platforms like Quora, Reddit, and X, with many questioning its appropriateness for a platform that doesn’t financially compensate moderators or users and a company yet to achieve profitability.

Huffman’s Defense

In response to the scrutiny, Huffman took to Reddit, the platform he co-founded, to address the concerns in a video Q&A session. He emphasized that his compensation comprises salary and stock, with the amount determined by Reddit’s board members based on his performance.

Breakdown of Compensation

According to a Securities and Exchange Commission (SEC) filing, Huffman received a salary of $341,346 in 2023, a figure augmented to $550,000 in February. Additionally, he obtained a $792,000 bonus last year, contingent on metrics such as Reddit user numbers, revenue, and adjusted EBITDA.

The bulk of Huffman’s compensation now comprises restricted stock units (RSUs) and stock options, with a significant portion tied to his tenure at Reddit until late 2028 and contingent on the completion of the IPO.

Performance Metrics and Equity Grants

Half of the stock options have relatively accessible vesting conditions, while the other half is tied to reaching specific share price milestones over ten years, aligning Huffman’s interests with those of shareholders.

Explanation of Recent Grants

Huffman clarified that a substantial equity grant received in late 2023 resulted from the cancellation of previous stock awards, simplifying compensation structures and aligning performance with company goals.

Previous Ownership and IPO Valuation

Notably, Huffman already holds approximately 3.2% of Reddit’s stock, which, based on the company’s targeted $6.4 billion IPO valuation, would value his stake at around $200 million even before factoring in his new compensation.

Contrasting Approaches: Zuckerberg and Musk

Comparisons highlight divergent approaches to CEO compensation, with Meta’s Mark Zuckerberg opting for a $1 annual salary alongside other benefits, while Elon Musk’s pay package at Tesla reached over $50 billion before being contested.

Future Prospects

Although Huffman’s reported compensation is substantial, its full realization hinges on Reddit’s performance post-IPO, making it uncertain whether he will indeed receive the estimated $193 million. Nonetheless, with his existing wealth and potential IPO gains, Huffman stands to further increase his wealth as Reddit goes public.