Amazon employees face possible pay cuts due to company's falling share prices

If you work for Amazon, you might be feeling a little anxious about your paycheck. According to a recent report by the Wall Street Journal, corporate staff at the online giant could see their pay packets sink by anywhere between 15% and 50% below compensation targets. 

This drop comes after CEO Andy Jassy issued a rallying cry to his remaining workforce following the January announcement of 18,000 layoffs. 

Why? 

Because Amazon's share prices have slumped by around 35% in the past year. 

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Here are three things to know about the situation:

1. Restricted stock units are part of the problem. Corporate staff at Amazon receive a chunk of their wages from restricted stock units. However, because the company's share price was so underwhelming in 2022—down almost 50%—employees' compensation targets could be missed by a significant margin.
2. Longer-serving staff could be hit the hardest. According to reports, the longer an employee has been with Amazon, the more their compensation is dependent on stock awards. In fact, for some who have been with the company the longest, up to 50% of their total income is balanced on market outcomes.
3. There's some good news on the horizon. Although Amazon's share price has taken a beating over the past couple of years, the company has rallied in 2023—up just over 13% at the time of writing. Experts predict this trend will continue. Amazon has also raised the component cap within salaries from $160,000 to $350,000 and is reportedly considering further raises of between 1% and 4% due to inflation pressures.

While it's not all bad news for Amazon employees, it's certainly a reminder that stock options come with their own set of risks. If you're an Amazon employee, it might be time to start thinking like an owner and keeping a close eye on the company's share prices.

Despite the potential pay cuts, Amazon remains one of the world's most valuable companies, with a market capitalization of over $1.5 trillion. The e-commerce giant is known for its competitive compensation and benefits package, which includes stock options, health insurance, and a 401(k) plan.

However, the recent report highlights the risks associated with relying on stock-based compensation. While stock options can provide a significant financial incentive for employees, they are subject to market fluctuations and can be unpredictable.

As the Wall Street Journal noted, Amazon's compensation model is designed to encourage employees to think like owners, but this approach also means that workers bear some of the risks associated with the company's performance.

It's worth noting that Amazon is not alone in offering stock-based compensation. Many tech companies, including Google, Apple, and Facebook, also provide their employees with equity as part of their compensation packages.

In the end, the situation at Amazon serves as a reminder that the stock market can be unpredictable, and that employees should carefully consider the risks associated with stock-based compensation when evaluating job offers.

“I struggle to see a company like Amazon not bouncing back from a decline of this magnitude,” Craig Erlam, a senior market analyst for Oanda, told Fox Business.

As for Amazon, the company's recent rally suggests that the worst may be over and that better days could be ahead for its employees. Nonetheless, it remains to be seen how the company will respond to the potential pay cuts, and whether it will adjust its compensation model to mitigate the risks associated with stock-based compensation.

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Executive summary: Amazon employees may see a significant reduction in their pay due to the company's falling share prices, which have slumped by around 35% in the past year. Corporate staff members are likely to receive 15% to 50% less compensation than expected as a result of the drop in Amazon's share value. The compensation model of the company encourages its employees to think like owners, which implies that their income is tied to the long-term performance of the company.

Tweet: Amazon staff could see significant pay cuts due to the company's falling share prices, with compensation targets falling 15% to 50% short of expectations, according to the Wall Street Journal.

Keyword list: Amazon, employees, pay cuts, falling share prices, compensation model, long-term performance, corporate staff, stock-based compensation.

Search question: How are Amazon employees affected by the company's falling share prices, and could they face significant pay cuts as a result?

Image prompt: A photo of the Amazon logo against a background of stock market charts and graphs, with the stock price trend line showing a sharp decline in the past year. In front of the logo, there is a group of worried-looking people who could be Amazon employees, standing in a line or huddled together, looking at their phones or laptops with concern. The image conveys the potential impact of the company's falling share prices on its employees' compensation and the uncertainty and anxiety that they may be feeling as a result.