Major companies in the tech sector are reeling. Google has seen its stock price decline amid its unfocused and inaccurate AI push. Even Microsoft, riding a high in its own AI output, saw profits fall year-on-year last quarter. However, it is Amazon that is struggling most, and now employees are feeling the pinch with their compensation plans taking a significant hit.
In terms of corporate roles, Amazon has always been a low-payer compared to other Big Tech companies. The difference was the company would make up for the shortfall in stock compensation. The longer someone is with the company, the more stock they get. In some cases, employees can earn 50% more on top of their income in stock rewards.
Amazon stock values have fallen consistently over the last year, which spells bad news for employees. The company's compensation plan leans heavily into stock and sources tell The Wall Street Journal that tumbling stock means employees will lose out.
Corporate employees at Amazon receive a major portion of their annual salary in stock units. As the company is in the midst of a drawn-out stock slump, those employees are facing a salary reduction of between 15% and 50% in 2023.
“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 told the WSJ. “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's stock price has fallen over 35% in the last year. The company is one of the worst hit by the general economic slowdown that is affecting the tech sector.
To prepare corporate employees for the bad news, Amazon HR is now sending training material to managers. This will give them the basics for telling employees that they are essentially getting a massive pay cut.
Still, a cut is better than no job at all. Amazon has recently let go of 18,000 workers across its corporate and non-corporate businesses. This is the largest layoff plan amid a glut of Big Tech companies cutting staff. Microsoft is removing 10,000 people, Google is cutting 12,000, while companies such as Meta, PayPal, Twitter, and Spotify are also swinging the axe.
Amazon CEO Andy Jassy recently referenced those cuts and the compensation reduction when speaking at a meeting at the company's headquarters. WSJ reports Jassy said the following:
“I know that this is and feels like a really difficult time. We have a very uncertain economy, we just had to say goodbye to 18,000 of our teammates, the market is in a funky spot,” he admits. “The result is compensations are impacted. And that is difficult. All of that is difficult. But I am quite optimistic that we have the chance to emerge from this challenging time in a relatively stronger position than we entered it.”
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