According to people familiar with the matter, the decline in Amazon's (AMZN) stock over the past year is causing employee pay to come in lower than target compensation, which is a part of the company's stock-heavy compensation plan. Amazon pays a significant portion of the annual salaries of its corporate employees in restricted stock units, and with the prolonged slump in the company's shares, pay for 2023 is expected to be between 15% and 50% lower than the projected targets the company gave to employees.
The decline in Amazon's shares is not only affecting the company's compensation plan but also the employees' trust in the company. 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.
Why it matters
Amazon's decreasing stock price reflects a wider economic slowdown as well as slowing growth in its retail business. The company cut back on hiring targets for its retail business by 7% last year amid decreasing consumer demand. Like many tech firms, Amazon has recently enacted sweeping layoffs, announcing plans to lay off 18,000 people—the largest job cut in its history.