May 30, 2023

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Amazon Considers Stock Vesting Change for Some Top Employees

  • Amazon is weighing a slate of compensation changes to stem a tide of exits.
  • One proposal is to implement monthly vesting for some Amazon Web Services employees who are “top tier” or Level 7 and above.
  • The proposals come as Amazon faces employee complaints about low pay and an exodus of top talent.

Amazon has been exploring ways to stop an exodus of top talent amid complaints about low pay, Insider has learned, including increasing the frequency of stock vesting for high-performing employees to fix a much-loathed part of how it pays employees that insiders say has led to a brain drain at the company.

Two people familiar with the plans said Amazon Web Services is considering moving to a monthly vesting schedule for employees who are a Level 7 (principal) or higher, and for the roughly 15% of employees who receive a “top tier” rating in annual performance reviews. An Amazon spokesperson said such a proposal is not underway, nor is it something the company has “centrally considered.”

The proposal is just one of several compensation changes insiders say are under discussion at Amazon. Amazon, like other big tech companies including Apple and Facebook, is starting to see rocketing competition from startups and rivals willing to shell out millions to score top talent.

In a statement, an Amazon spokesperson said that the company knows “that our employees and candidates have choices as to where they work” and that Amazon regularly reviews “compensation and benefits to ensure that our offerings are competitive.”

Insider previously reported Amazon is quietly hiring a team to communicate changes in compensation to employees internally, according to a person familiar with the matter and an internal document showing a six-month position in which someone would explain how compensation worked and “what changes and why.”

Amazon’s corporate employees receive a large part of their compensation in the form of restricted stock units, which currently vest every six months. (At Google, by comparison, a portion of employees’ restricted stock units vest every month.) Amazon’s vesting schedule is also heavily backloaded: 80% of shares only begin to vest after an employee has been with the company for two years. Base salaries at Amazon are capped at $160,000 in most locations, relatively low compared to other major tech employers.

Employees have complained about Amazon’s compensation structure for years, but the situation appears to have reached a crisis point in recent months as Amazon’s share price has stalled and competitors dangle lucrative compensation packages in front of prospective hires.

Low pay emerged this year as one of the top issues prompting employees to consider changing jobs, according to an internal Amazon survey conducted this summer. Amazon executives are also quitting in droves, many to take more highly compensated jobs elsewhere. An Amazon spokesperson said that employees leave the company for many reasons outside of compensation.

Increasing vesting frequency could be one way to respond to employees’ gripes over pay without straying too far from Amazonian principles of “ownership” and “frugality” that have shaped the company’s current compensation structure.

Still, the change could be meaningful for some employees, according to a former Amazon employee, who said the current compensation structure, including the vesting schedule, “is driving people away.” Amazon employees are expected to work long hours, the employee said, and “to see the amount you actually get paid every six months, with the taxes taken out, it’s just not worth it.”

Are you an Amazon Web Services employee or do you have insight to share? Contact reporter Ashley Stewart via the encrypted messaging app Signal (+1-425-344-8242) or email ([email protected]).

Do you work at Amazon? Contact reporter Katherine Long via the encrypted messaging apps Signal/Telegram (+1-206-375-9280) or email ([email protected]).