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Amazon staff might get paid 50% less because shares have fallen so much
- tylerag 4y agoIn possibly related news, Bezo's $500 million yacht just set sail.
- geodel 4y agoYeah, it really makes me angry that a power point manager or a web service developer at Amazon can't have same lifestyle as Jeff Bezos.
- deleted 4y ago[deleted]
- x3n0ph3n3 4y agoBonuses have always been discretionary.
- davidw 4y agoGood time for startups in that they can be a bit more competitive with some of these behemoth companies?
- jchonphoenix 4y agoUnfortunately not. I just interviewed around for VPE roles at Series B companies, and they aren't even able to be competitive with non-Director compensation at FAANG.
- spacephysics 4y agoWait, so share prices move? /s It’s the nature of a compensation package. Part of it is risk. If you didn’t adjust for risk during negotiating your pay, or was expecting more purely from past performance of the stock, that’s on them
- whatever1 4y agoThe company was not giving raises when the stock was going up with the rationale that there is a compensation target that was exceeded. Now that the compensation is way below the target the company is silent. So 0 risk for the company, all the risk goes to the employees. And btw the stock that AMZN was giving to the employees was coming out of thin air. Not from buybacks. So they were compensating people with dilution ?
- loeg 4y ago> And btw the stock that AMZN was giving to the employees was coming out of thin air. Not from buybacks. So they were compensating people with dilution ? All employee compensation is (minuscule) dilution. Don't worry about it too much.
- aeyes 4y ago> All employee compensation is (minuscule) dilution. Miniscule? Is this a joke? Last year their stock based compensation was almost $20B. As a shareholder I wouldn't be amused about this.
- mabbo 4y agoWhy? The alternative is to pay those people with cash, which costs the company money. That would lower the value of the stock because profits would become losses. It works out to be the exact same thing, except that Amazon doesn't record a loss on its finances.
- loeg 4y ago$20B is nothing compared to the value you would destroy by not paying your employees. Stock compensation and cash compensation are equally dilutive for shareholders.
- willio58 4y agoI don’t think that’s how this works. Amazon doesn’t print money when they give employees stock. They give x% of the company as stock (where x is a really really small number). They might give less or more depending on a number of factors, but buybacks are unrelated to that.
- whateveracct 4y agoThis is why I always quote my total comp as cash when negotiating. I have multiple times been able to turn total comp into salary (with a slight bump overall). Last time I did it, former employer's stock tanked shortly after I left. Dodged one there.
- loeg 4y agoYMMV, but I've never been successful doing this, and the compensation available in salary + stock (modulo some expected risk) has always greatly exceeded cash-only compensation.
- whateveracct 4y agoI tended to do it when I jumped to a company who didn't have RSUs. The anchoring of my current RSUs + my vagueness describing it (I didn't break it down) + the fact that I was jumping jobs after a few years was enough to secure it as cash and then some. Probably harder to do in this market, but the last few years it was a consistently easy play (did it a few times).
- quest88 4y agoWhy are the shares down so badly? I'm out of the loop.
- markdown 4y agoCovid19 is gone. We need Covid20 to get Amazon stock up again.
- paxys 4y agoShares of Amazon (and really most of tech) are only "down" from their peaks during the pandemic, when they were artificially inflated due to stimulus money as well as people thinking that the world's tech reliance would stay the same after things went back to normal. If you go back further, to say 2019 or early 2020, they are still up.
- umeshunni 4y agoeCommerce growth rates rose dramatically during Covid. Everyone expected those trends to hold. They did not and have reverted to the mean.
- blagie 4y agoI think it's complex. The obvious reasons are the covid-19 bump is gone, and all tech stocks are down. The less obvious reason is that Amazon retail growth doesn't seem to have as much of a long-term due to: 1) Market saturation 2) Declining customer service 3) Fakes, frauds, and cons ... and so on. A lot of this might have happened due to poorly handling the covid-19 surge. Somehow, whatever made Amazon work before stopped working. It's now been going on for long enough that Amazon is losing reputation, and people (or at least I) am sceptical it can be fixed. Or perhaps it's related to Andy Jassy taking helm. In either case, a lot of people I know have been trickling away from Amazon. It's not enough to make a dent yet, but it's definitely not growth.
- tiffanyh 4y agoThis is a tough one, because stock (like bonus) is not guaranteed. But when the stock goes up every year for 20-years straight, it’s hard for people to not think its part of their guaranteed base pay.
- Waterluvian 4y agoIt’s like people treating a tax return like they got a bonus. If these things fool someone, they’re likely not managing their finances well, if at all. On the other hand, life loses a certain spice when the money just disappears into the money pile, serving only to balance the Spreadsheet of Predictability.
- tjdetwiler 4y agoAmazon actually tells employees that they have a "total compensation" philosophy, which means that when the value of unvested shares increases then Amazon will take that into account when issuing new grants (ex: as part of the performance review and compensation process). For example, if Amazon thinks you should be paid $250k per year and your total comp for the next year is at $300k based on the value of your granted but not yet vested stock awards, then Amazon will not award anymore stock awards to vest in that year. This is different from most other companies that usually just give you a stock award with a standard vest schedule (ex: 25% vest over 4 years). Amazon has justified this buy telling employees that if the stock drops below your TC target, then they'll award more shares to make you whole. So the question is are employees going to be down from their TC target, or from an inflated compensation number from during the pandemic when many employees were likely making more than their TC targets. At least this was how it worked when I was employed at Amazon in around 2017.
- loeg 4y agoThis was still the case when I was considering an Amazon offer in late 2020.
- oceanplexian 4y agoYeah, i worked at AWS and 100% heard leadership make this statement, even heard them make statements that they would issue more RSUs to make employees whole if the TCT dropped too much. Lots of us joked that that would never happen annd TCT was a one-way street- I guess we were proven right.
- quest88 4y agoWhy are the shares down so much? Edit: sorry for the duplicate question. The first question's response asked me to try again.
- TrackerFF 4y agoCOVID bull-run has been over for a year, and things have returned to normal.
- micromacrofoot 4y agoShare prices went up due to increased spending at the start of the pandemic (after the initial lockdowns) and it’s weird that people didn’t expect them to come back down - they’re basically back where they were in 2019
- blagie 4y agoIn 2020, there were quite a few possibilities, ranging from "it's a flu" to "the new normal." I think share prices had all of those baked in. "New normal" would have meant the end of retail. Now that we know where things landed, it's possible to re-adjust.
- micromacrofoot 4y agoYeah in 2020 that was understandable, but I can't imagine thinking that in January 2022.
- angarg12 4y agoThis debate is a bit more nuance that it might look like. Some people use the argument "you didn't give stocks back when price was going up". That's true, but there are unique feature of Amazon compensation package that make the current situation... peculiar. This is a short primer: your compensation is composed of a base salary and RSU, which is calculated as a dollar value and converted to shares. When the RSU vest (twice a year) you get the shares at whatever market value. If they've gone up (as they historically did a lot) you win. If they go down (as the last ~2 years) you lose. This is fair TBH. When you take part of your comp in stocks, you are assuming some amount of risk. There are a few problems though. a) Amazon bakes in a 15% stock price increase when calculating future compensation, and they adjust the amount of shares accordingly. This means that they effectively limit the employees upside. Also, think how ridiculous it is when your salary assumed a 15% price increase and it went down 30% instead. b) Amazon has compensation bands, and target each employee comp to a certain spot in the band (say 50%) based on performance. If you are above band (for example, due to stock appreciation) you get nothing or a nominal amount. Notice this is different from similar Big Tech which issue "memoryless refreshers" i.e. stock refreshers are independent of previous ones. c) Amazon issues raises one year out after the performance reviews happen. So say you did a good job in 2022, and you get your performance review in 2023, then they will issue new shares for 2024. I believe it also used to work like that for promotions (i.e. you get promoted now, but you'll see your raise next cycle), but they changes it recently. d) Unlike comparable companies it doesn't have performance bonus, spot bonuses, or others. We are waiting for our performance reviews to happen but rumor has they are not giving increases to make up for the lost stock value, meaning many people will be underwater. Funnily enough this creates a very weird situation due to another quirk of Amazon compensation system. New offers include a 4 year compensation package, with most of the comp as cash for years 1 and 2, and backloaded RSU for years 3 and 4. Afterwards there is a "cliff" and comp is decided on a rolling yearly basis. So the newest hires are going to be virtually unaffected while tenured employees will lose a big chunk of their comp. This is compounded by the fact that many recent offers have been overpriced w.r.t. existing employees due to the incredibly competitive job market. At the end of the day this might sound like the world smallest violin coming from overpaid tech workers. In any event it has created huge disparities due to timing and luck rather than skills or value. Curious to see what'll happen later this year and next.
- Aunche 4y agoHow can they get paid 50% less when share prices drop by 35%? Can't get past the paywall.
- ska 4y agoI assume because equity is more than 50% of total comp. Or was.
- Macha 4y agoIf equity was 100% of total comp, and shares dropped by 35%, the most total comp could drop by is 35%. The smaller the share of equity, the smaller the percentage of total that drop would be
- deleted 4y ago[deleted]
- umeshunni 4y agoAmazon does a weird thing where the mix of stock to cash varies by tenure. So, someone might have been at 85% cash 15% stock in year 1, but are now at 50% cash, 50% stock. So they're getting more stock now than in earlier years.
- DMell 4y agohttps://12ft.io/proxy?q=https%3A%2F%2Ffortune.com%2F2023%2F02%2F21%2Famazon-staff-pay-50-less-expecting-shares-fallen-andy-jassy%2F https://12ft.io/proxy?q=https%3A%2F%2Ffortune.com%2F2023%2F0...
- paxys 4y agoRemember that Amazon stock is still up when compared to its pre-pandemic (so early 2020) price. The employees will survive.
- redtriumph 4y agohttps://archive.ph/Wgxug https://archive.ph/Wgxug
- Vapormac 4y agohttps://archive.is/Wgxug https://archive.is/Wgxug (non-paywall)
- GianFabien 4y agoWhy don't OPs post links such as this, instead of the pay-walled versions?
- Vapormac 4y agoI'm not sure, but I mainly post the links when my network won't let me view it from work. Or when it's paywalled. I believe OP's usually want to support the work they are ostensibly paying to read. I just want to read interesting things.
- WalterBright 4y agoIn the various companies I worked for, my stock options were always underwater, if I recall correctly. That's the risk with stock options. I also know several Amazon millionaires who got that way via stock options. That's the reward with stock options. Remember when Boeing stock tanked after the 737MAX crisis? The employees complained that Boeing management still got their performance bonuses - because the shareholders demanded that those bonuses be based on multi-year returns, not just short-term previous quarter results. The employees complained that their quarterly bonus disappeared - because the union demanded it be based on the previous quarterly results. 1. be careful what you ask for 2. accept with grace when you get what you asked for
- WalterBright 4y agoI admit to some envy when others I knew at other companies made bank with stock options while mine were underwater. I have my shortcomings, too.
- anonuser123456 4y agoMost FAANG comp is RSU, not options.
- adam_arthur 4y agoThe distinction is not meaningful in this context. Both are deferred compensation that's subject to gaining/losing value along with the underlying company valuation
- rippercushions 4y agoNo, options are more of a gamble. Stock values move up and down, but an RSU worth something today will likely be worth something tomorrow: even much-pilloried Meta stock is down "only" 50% from peak at this point. An underwater option, though, is completely worthless.
- adam_arthur 4y ago
- ChuckMcM 4y agoOkay, there are stupid headlines and REALLY stupid headlines. This is the latter. There is a reason "equity components" of compensation are called "variable compensation" just like bonuses are. Anyone who "counts on them" is really setting themselves up for disappointment. That people "believe" they are wealthier than they are because they are counting stock that they either don't have, or hasn't vested yet, at face value? Well that problem is quite old. During the dot com meltdown, so many people put down payments on houses that they were going to buy with "stock options" but didn't exercise the options because once they do that, they would "stop going up." Our neighbor who was a realtor, has 8 houses "fall out of escrow" because the buyer withdrew (giving up their good faith money) before the close during 1999. Stock based compensation == 0 until it is sold and the taxes paid, then it is worth what ever you were left with. But counting it as "income" before you sell it? Not smart.
- WalterBright 4y agoYears ago, my neighbor would always refer to his car as his "quarter million dollar Oldsmobile". I finally got curious enough to ask him the origin of the name, as the car didn't look like a high dollar collector car to me. He laughed and said that's what his stock options would have been worth today if he hadn't sold them to buy the Olds.
- ChuckMcM 4y agoI had a 1.6M$ Chrysler Concorde :-) I sold 1000 shares of SUNW in December 1994, which gave me enough money to buy it for cash, which was really a huge deal for me. The stock then proceeded to split twice. On the flip side, when Freegate was acquired, I took some of the stock I had that wasn't "locked up", sold it to buy a Subaru Forester for cash in 1999. Two years later that car was worth about $87.50. (at the value of the stock). Those experiences definitely helped me appreciate that Stock != Cash.
- GianFabien 4y agoIt's the old story ... don't count the money until the check has been cleared and the balance is in your account. Until then it's just a dodgy IOU. Same for all forms of paper "wealth".
- tictacttoe 4y agoI’m one of those affected. It’s not particularly interesting to discuss if people are aware that stock can go down. No one is disputing that. However, if the market pulls back X% on compensation, but Amazon pulls back Y% with Y > X, people are going to leave… and not the ones you want to leave.