How does a company retain its most valuable employees? Does it come down to money, or building a culture so incredible that nobody ever wants to leave?
At Amazon, the quest to retain valuable technologists reportedly boils down to one thing: stock. According to an analysis by The Information, the e-commerce giant is handing out “record amounts” of stock, including 138 million restricted stock units to employees in the second quarter of 2022.
That’s “an 82 percent increase from the number of restricted shares for employees it issued during the same period last year, according to corporate filings,” The Information added. “That’s more shares than Amazon has ever awarded to employees in a single quarter, and more even than the number it issued to workers in all of 2021.”
In February, Amazon boosted its maximum base pay for corporate and technology employees from $160,000 to $350,000. “This past year has seen a particularly competitive labor market and in doing a thorough analysis of various options, weighing the economics of our business and the need to remain competitive for attracting and retaining top talent, we decided to make meaningfully bigger increases to our compensation levels than we do in a typical year,”the company wrote in an internal postreviewed by GeekWire.
But for more experienced technologists at Amazon (and other tech giants), stock is an increasingly massive element in overall compensation. According tolevels.fyi, which crowdsources salary data for a wide range of tech companies, an entry-level Amazonsoftware engineercan expect to earn an average of $128,304 in base salary, stock worth roughly $23,163, and a bonus of $19,096, for a total of $170,563. By the time that engineer becomes an SDE III, the average base salary of $161,703 is supplemented by stock worth $171,054 and a bonus of $8,730, totaling $341,487.
For senior executives, of course, the stock payouts might climb even higher. Amazon’s decision to heavily leverage its stock options as a retention tool suggests that even raising the maximum salary wasn’t enough in this current environment—despite many tech giants enacting hiring freezes, the overall tech unemployment rate suggests technologists with the right mix of skills and experience have their pick of opportunities in the broader world.
FAQs
The Takeaway. One big reason for the hefty stock awards: Amazon is doing everything it can to keep people, especially workers with much sought-after technical skills, as its stock tumbles and hiring competition intensifies.
Does Amazon give stock to employees? ›
Each year, Amazon grants most of its corporate employees a set number of restricted stock units to vest over the coming years.
Why do companies give stock to employees? ›
Benefits of offering stock options to employees
A cost-effective way to attract talented candidates, employee stock options often encourage new and old workers alike to stay for the long haul. These plans may also decreaseemployee turnoverrates to potentially save your business money in employment and training costs.
How much are Amazon RSU worth? ›
Suffice it to say, while you are watching your RSUs fluctuate in price, remember that they are only worth about 65-75% of the quoted value as income taxes are most definitely due upon vesting.
How often do Amazon employees get RSU? ›
Year 1: 5% of your RSUs vest at the end of the first year. Year 2: 15% of your RSUs vest at the end of the second year. Year 3: 40% of your RSUs vest at the end of the third year. Year 4: 40% of your RSUs vest at the end of the fourth year.
How much stock does Amazon give their employees? ›
Amazon is on the 5-15-40-40 schedule. For example, if you are promised 200 shares of Amazon, you'd receive 10 shares on the 15th of the month of your first anniversary, 30 shares on the 15th of the month of your second anniversary, 80 shares six months later, and the final 80 shares in another 6 months.
How many shares of stock does Amazon give to employees? ›
At the start of hire as an Amazonian (Level 1) you are given 4 shares of restricted stock units (RSU) (which will be sellable after 2 years of continuous work). Current value: $ 531.07 ($2124.28 total) Other factors affect RSU offers depending on job level, previous experience, and many other factors.
What happens when a company gives you stock? ›
A stock option is the right to buy a specific number of shares of company stock at a pre-set price, known as the “exercise” or “strike price.” You take actual ownership of granted options over a fixed period of time called the “vesting period.” When options vest, it means you've “earned” them, though you still need to ...
Can you cash out your employee stock? ›
Can I Cash Out My Employee Stock Purchase Plan? Yes. The payroll deductions you have set aside for an ESPP are yours if you have not yet used them to purchase stock. You will need to notify your plan administrator and fill out any paperwork required to make a withdrawal.
How much stock do companies give employees? ›
Calculating stock option percentages
It's quite rare for an employee or contractor to receive more than 1% fully diluted ownership in a company, except where that team member is a senior hire, or the options are in substitution for a significant salary package.
Depending on your job level and if you are scheduled to work 30+ hours per week, you are eligible to: Receive a grant of RSUs that vest over time, in accordance with plan documents.
What does Amazon RSU mean? ›
What Are Amazon RSUs? Restricted Stock Units (RSUs) are shares of Amazon stock that Amazon employees are awarded as a part of their total compensation package. Rather than receiving these shares all at once, shares vest over time.
What happens to RSU when you leave Amazon? ›
Whenever you decide to quit, the vested portion of your RSUs will stay yours. Since shares of company stock are released to you upon a vesting date, those RSUs become shares that you own outright. And since you now own company shares outright, your departure from the company has no effect on your ownership.
Am I taxed twice on RSU? ›
So how do RSUs get taxed? You'll owe taxes on your equity compensation twice, at vesting and when you sell. Vesting - On your vesting date, you automatically own shares of the company stock. The stock has a fair market value which is your cost basis.
Do I pay taxes on RSUs? ›
When you receive an RSU, you don't have any immediate tax liability. You only have to pay taxes when your RSU vests and you receive an actual payout of stock shares. At that point, you have to report income based on the fair market value of the stock.
Does everyone at Amazon get stock? ›
Most of our employees can become owners of the company through the granting and vesting of restricted stock units (RSUs).
How do stock options work for Amazon employees? ›
RSU grants are typically given to employees as part of their overall compensation package, and vesting schedules vary depending on the employee's position and tenure with the company. Vesting periods can range from one to four years, with a portion of the RSUs vesting on each vesting date.
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