Memo to software executives: Now is the time to radically reduce the amount of stock you give employees. That would win you some favor with investors, who’ve generally gone off your sector thanks to worries about the threat posed by AI. Even if those concerns are overblown, cutting costs in the face of a major disruption is a smart idea. It’s no secret that software companies overdo stock compensation compared with companies in other industries. KeyBanc analyst Jackson Ader estimated in a report last month that software companies included in the Russell 1000 stock index had a median stock compensation expense of 13.8% in 2024, whereas for all companies in the index, the median was 1.1%. And 13.8% isn’t particularly high for software: a few software firms report stock comp that’s well above 20% of revenue. A good example is Snowflake.