Corporate employees at Amazon will reportedly receive compensation that falls far short of expectations due to Amazon’s declining stock price.
Amazon’s 35 percent drop in share price will result in corporate employees receiving total compensation worth 15 percent to 50 percent less than their target values.that Amazon’s stock decline over the past year is causing employee pay to come in significantly lower than target compensation, according to people familiar with the matter.
Amazon has lost more than 35 percent of its share price over the past 12 months. Amazon reportedly bases the issuance of restricted stock units to employees on the belief that Amazon’s shares will increase in value by at least 15 percent annually. By linking total compensation to the business’s long-term performance, Amazon’s compensation model aims to inspire employees to think like owners. The model carries some risk and potential upside from year to year due to the stock price’s volatility. However, historically at Amazon, it has performed extremely well for employees who have taken a long-term perspective, according to an Amazon spokesman.
Historically, Amazon has paid base pay to employees at a lower rate than its big-tech competitors, but it has made up the difference with stock awards that vest over time. According to this strategy, the longer an Amazon employee works for the company, the more their compensation may be based on stock awards, with some stock awards accounting for 50 percent or more of their total income.
Amazon CEO Andy Jassy addressed the issue at a recent all-hands meeting at Amazon’s Seattle headquarters. “I know that this is and feels like a really difficult time. We have a very uncertain economy, we just had to say goodbye to 18,000 of our teammates, the market is in a funky spot,” he said, adding that Amazon and other companies have seen an impact on their stock prices. “The result is compensations are impacted. And that is challenging. All of that is difficult.
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