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Headline- In 2022, Amazon’s shares declined by more than 35 percent due to poor macroeconomic conditions, resulting in pay for 2023 being between 15 percent and 50 percent lower than the projected targets.
In Short
- Amazon corporate employees will get a pay cut after a slump in the company’s shares.
- The reduction in pay was also reportedly addressed by CEO Andy Jassy during an all-hands meeting.
- Amazon had announced that workers needed to be at the office for at least three days from May onwards.
Amazon corporate employees are reportedly facing a pay reduction after a prolonged slump in the company’s shares. As reported by Bloomberg, Amazon issues restricted stock units (RSUs) to employees, likely at higher positions, to retain them at the company for longer. The value of the stocks depends on the performance of the company and certain departments. With RSUs, employees are motivated to work as if they’re part owners.
In 2022, Amazon’s shares declined by more than 35 per cent due to poor macroeconomic conditions, resulting in pay for 2023 being between 15 per cent and 50 per cent lower than the projected targets Amazon gave to employees, the report adds. People familiar with the matter told the publication that “between 2017 and early 2022, the stock price increased on average by about 30 per cent each year. But Amazon’s stock is currently trading around $96 per share (roughly Rs 7,950), and some employee pay packages are structured under the assumption that Amazon’s shares would be around $170 (roughly Rs 14,000) per share.”
The report notes that Amazon’s human resources department sent “training documents” to managers to address the reduction in pay. Managers are also being asked to retain employees until a recovery in stock prices.
It is reported that Amazon typically offers less base-pay compensation to employees than its rivals, but employees make up by vesting these stocks. The report states, “Employees say the longer an Amazon employee stays with the company, the more their compensation can depend on stock awards, with stocks making up 50 per cent or more of total income for some.”
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The reduction in pay was also reportedly addressed by CEO Andy Jassy during an all-hands meeting at Amazon’s Seattle headquarters. The CEO said that the market is in a “funky spot” and Amazon has already made a tough decision to lay off 18,000 employees. He added, “The result is compensations are impacted. And that is difficult. All of that is difficult. But I am quite optimistic that we have the chance to emerge from this challenging time in a relatively stronger position than we entered it.”
Bloomberg reports that Amazon has stopped issuing more RSUs to employees and may receive fewer hikes. Amazon has also rescinded job offers from some candidates who had accepted them.
Recently, the company announced that workers needed to be at the office for at least three days from May onwards.
