Amazon Senior Staff to Miss Out on Cash Raises This Year
In a departure from its standard compensation practices, Amazon has revealed it will not be offering the customary annual cash raises to its most senior employees. Staff classified as level 6 and above, which covers middle management roles upwards, have been informed they should not count on a pay increase in their base salary for the current year. This marks a shift in Amazon’s reward strategy that has relied heavily on stock compensation for top earners.
The online retail giant claims the decision is due to stock gains over the last 12 months meaning senior employees have already benefited greatly. Amazon shares are up around 80% over the past year. Which the company says accounts for “a meaningful excess” in total compensation for higher levels. However, the lack of cash raises risks losing talent to rivals who can offer fatter pay packets.
How Will Staff React To The Change?
Morale is sure to take a hit from the compensation update, even if stock options continue. Cash raises are a key retention tool that help offset the risks of holding company equity. Some flexibility is being shown, with the possibility of new restricted stock units or promotions triggering a pay bump. But overall this moves Amazon’s reward structure further away from peers still offering regular cash raises.
It remains to be seen what the long term impact will be on recruiting and retaining senior talent. While stock has boomed, such market forces are unpredictable. Rivals may now have an advantage in wooing disgruntled Amazon veterans by dangling the prospect of higher cash raises. Much could depend on how well leadership is able to justify and communicate the rationale for the controversial policy change.
