The steep decline in Amazon Inc.’s stock over the past year is roiling the technology company’s stock-heavy compensation plan, resulting in employee pay coming in significantly lower than target compensation, according to people familiar with the matter.
Amazon AMZN, -0.97% pays its corporate employees a large chunk of their annual salaries in restricted stock units, and a prolonged slump in the company’s shares is causing pay for 2023 to be between 15% and 50% lower than the projected targets Amazon gave to employees, some of the people said.
“Our compensation model is intended to encourage employees to think like owners, which is why it connects total compensation to the company’s long-term performance,” an Amazon spokesman said in an emailed statement. “That model comes with some year-to-year upside and risk because the stock price can fluctuate, but historically at Amazon, it’s had a history of working out very well for people who’ve taken a long-term view.”
Amazon has historically given less base-pay compensation to employees than its big-tech peers but made up the difference with stock awards that vest over several years. 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% or more of total income for some.
An expanded version of this report can be found at WSJ.com