Amazon’s senior managers and other top leaders will not receive cash pay raises this year, according to information obtained by Fortune, marking a significant change in the reward structure for high-ranking employees within the online retailing giant.
Instead of cash pay raises, some of these employees may receive additional company stock, although such stock grants are not guaranteed. Amazon’s compensation team has begun notifying select leaders about the adjustments and detailing this year’s policy.
The policy change affects employees classified internally as Level 6 or higher, encompassing middle management and above roles. This includes not only managerial positions but also certain individual contributor roles like senior software engineers. The adjustment applies universally to all employees at these levels, regardless of whether they work in office environments or managerial capacities within Amazon’s fulfillment centers.
Traditionally, Amazon’s compensation packages for many corporate employees have leaned heavily towards stock compensation compared to other tech companies. In response to inquiries, Amazon spokesperson Margaret Callahan emphasized the company’s focus on ownership, with stock units (RSUs) forming a significant portion of employee compensation, especially for senior staff. Callahan highlighted the substantial increase in Amazon’s stock price over the past year, indicating that many employees’ total compensation has far exceeded initial projections. As a result, the company is prioritizing cash base pay increases for employees whose compensation leans more towards base pay than stock.
In essence, the higher an employee’s seniority within the company, the less likely they are to receive a cash payment. However, exceptions may exist for recently promoted or internally transferred Level 6+ employees. While some Level 6 and above employees may receive additional RSUs, this is not guaranteed. For those who do, the RSUs will vest quarterly, aligning with the vesting schedule of higher-level employees.
The adjustment in compensation policy aligns with Amazon’s ongoing efforts, under CEO Andy Jassy, to streamline costs and enhance profitability while focusing on strategic investments in areas like generative AI. Notably, Amazon recently announced a significant investment of $2.75 billion in AI company Anthropic, further underscoring its commitment to innovation and growth initiatives.
Jassy’s leadership has seen Amazon undertake significant restructuring, resulting in layoffs of over 27,000 corporate employees in recent years. Despite this, the company has achieved record-breaking quarterly profits, reflecting its strategic focus on maximizing efficiency and capitalizing on key growth opportunities.