Atlassian will reduce its share-based compensation for staff as chief executive Mike Cannon-Brookes moves to cut costs and adjust to an artificial-intelligence revolution that has slashed the company’s market value.

The tech developer, which blamed AI for its decision this week to cut 1600 jobs, has begun a process to review the level of equity-based compensation awarded to employees amid a broader ­industry-wide reckoning for software stocks.

Stock-based compensation involves granting employees company shares or options instead of paying them in cash. Pay packages are often a mix of both, allowing companies to conserve cash for acquisitions, marketing and other growth initiatives

Atlassian’s use of stock compensation accounts for 26 per cent, or $US1.36bn ($1.9bn), of its revenue in the 2025 financial year, which has been regarded by the company’s board and investors as too high.

The company’s staff are also feeling the brunt with the company’s share price plunging 65 per cent in the last year alone, reversing years of stock appreciation that has turned software engineers into multi-millionaires. Atlassian has indicated that as part of its medium-term financial targets it planned to decrease stock-based compensation over time, without identifying a specific goal, with the aim of achieving profitability.

Quizzed about its internal thinking this week, Atlassian said it recognised it was “on the high side” compared to its Silicon Valley peers.

“We’ve been thinking about this very seriously for over six months now, where there’s a lot of energy around this. We take it very seriously,” Atlassian’s investor relations head, Martin Lam, told a conference.

“We need to bring that down over time. We’re looking at different ways that we can perhaps modify our stock comp program.”

While the move to cut 10 per cent of its global staff immediately cuts the compensation equation, it is expected a greater upfront cash component ultimately will have to be balanced as it hires new staff in other growth areas of the business.

A compensation redesign was now on the table, including potential “cash-heavier” compensation for certain roles, according to Citi analysts, while noting that no ­decisions had been made yet.

The broker said AI talent was expensive and the pursuit of strategic hires and investments had temporarily pushed Atlassian off its internal profitability target under GAAP accounting methods.

“For Atlassian, it is important to moderate stock-based compensation lower as it has one of the highest levels of stock comp in the industry,” Williams Blair analysts said this week. “This has recently become a louder conversation as tech investors look for more profits from scaled businesses.”

Atlassian said it was a priority to accelerate profitability.

“The question was like, how do we think about timing on this? I won’t provide a specific timeline. I would say there’s different actions that we look at and … we think about,” Mr Lam said. “Again, part of the balance is of course retaining and hiring key talent.

The Atlassian share rout has wiped about $19bn off Mr Cannon-Brookes’ fortune as investors become concerned that AI coding tools will replace the company’s flagship products.

The Atlassian CEO said the mass job cull – with about 30 per cent of the 1600 job cuts to come from Australia – was an “incredibly difficult decision”.

Chief technology officer ­Rajeev Rajan will step down from his role at the end of March, to be succeeded by “next generation AI talent” Taroon Mandhana and ­Vikram Rao.

Since 2016, Atlassian has about $5.7bn buying more than 24 companies with an average deal cost near $400m, including Loom in 2023 for $975m.

Read related topics:Mike Cannon BrookesScott Farquhar