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💰 AMAZON EMPLOYEE COMPENSATION – (SALARY, BONUS, AND RSU’s ) - YouTube
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Let's talk about new
Amazon employee compensation.
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First off, if you're
watching this, I suppose,
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either congratulations
on your new job at Amazon
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or perhaps you're going
through the hiring process.
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If you wanna learn more
about Amazon compensation,
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you have certainly come
to the right place.
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Before we get started, just
a very quick disclaimer.
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And moving right along. Right off the bat,
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there are really three ways
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in which Amazon employees are compensated.
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The first is base salary, this is really,
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really straightforward.
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This is simply your monthly paycheck,
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not a whole lot to talk about there.
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The second is a year one and
a year two on-hire bonus.
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And then the third are
Restricted Stock Units or RSUs,
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these are the shares of
Amazon stock that you receive
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as a new employee.
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Let's talk a little bit
about how this plays out
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and look at a timeline to see
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how everything fits together here.
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Looking at a timeline of
compensation, obviously,
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you have your base salary, not listed
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on the timeline, really
straightforward, not a lot
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to talk about there, you're
paid each and every month.
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On top of that, you've got your year one
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and year two on-hire bonuses.
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Now, these for all intents
and purposes, you can think
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of it just like a paycheck,
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just like your regular base salary,
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not particularly complicated.
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If you're entitled to a
year one on-hire bonus
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of, let's just say $60,000,
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you're gonna receive $5,000 per paycheck.
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Again, really, really straightforward.
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Now the one thing worth
noticing right here is
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that the year two on-hire
bonus is almost always
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a little bit smaller than
that year one on-hire bonus,
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which we'll talk about
here in just a moment
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when we start looking
at some real numbers.
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And then lastly,
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you have your Restricted
Stock Units or RSUs,
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these are the shares of Amazon
stock that you're granted
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when you are hired. But again, remember,
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you don't actually
receive these shares until
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the shares actually vest.
Now, based on the current
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Amazon vesting schedule
for a new hire, this means
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that you're gonna receive 5%
of your shares after year one,
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15% of your shares after year two,
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and then 20% of your
shares every six months.
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So 20% of those shares
at two and a half years,
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three years, three and a
half years and four years.
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You'll also notice from this
timeline when your RSUs vest
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and the fact that the size
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of these respective vests
gets larger over time.
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If you've found this helpful so far,
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we'd love it if you gave
the video quick like,
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it'll help others like you get
a much better understanding
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of their benefits and compensation.
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Moving right along. I think it's helpful
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to put some actual numbers behind this
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to understand what this actually means,
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and what do these percentage
breakdowns look like.
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Now, obviously, this
is going to vary a lot,
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whether you're coming in
as a new hire at level four
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versus somebody else who's
coming in at a level six, seven,
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eight, you name it.
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So, while these numbers
are obviously going
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to be substantially
different for you versus
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the next person, I think that
at least the big picture idea
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is particularly important here.
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So Amazon's maximum base
salary, I should say, in 2021,
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outside of the Bay Area, in
Greater New York City area
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is $160,000. So if you
come in at a higher level,
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don't be surprised if you're
not starting at $160,000,
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you might start at $150,000
$155,000. And really, a reason
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for this is it gives
the manager a little bit
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of flexibility down the road,
to give you a little bit
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of a raise if you're doing a
great job, it's not the case
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that the manager says,
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"Well, hey, sorry. You've
done a spectacular job,
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but I can't give you a
raise because you're already
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at that max salary." So, it
very well could be the case
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that you start at, let's say $150,000,
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in then next year you get
bumped up to $155,000,
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and then let's just say
in year three and four,
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you get bumped up to that
$160,000 maximum base salary.
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And then you're gonna receive
your Restricted Stock Units.
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Now, in this example, we're gonna assume
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that somebody was
entitled to $600,000 worth
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of restricted stock at their initial hire.
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As I mentioned earlier, at
the end of the first year,
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you only receive 5% of that initial grant.
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And so in this case, that
would be $30,000 of stock
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at the end of the first year.
At the end of the second year,
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you're gonna receive 15%, in
this case that would be $90,000
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in stock. And then each
six month time period after
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that you're entitled to
20% of your initial grant.
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So, after six months if
the price has not changed,
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and again, we're talking about
two and a half years in here,
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you're entitled to $120,000 in stock.
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At the end of the third
year, $120,000 in stock.
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Three and a half years
in, $120,000 in stock,
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and at the end of the fourth year,
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another $120,000 in stock,
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assuming the price has not changed.
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So, you'll also notice that
in years three and four,
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in aggregate, you're gonna receive 40%
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of that initial grant, and
that's going to add up to,
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in this scenario, $240,000
of vesting grants.
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Another quick thing to
note, all of these numbers,
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obviously, are gross, Amazon
is gonna withhold money
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for taxes from your
salary, from stock grants
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and from the on-hire
bonus. Now you'll notice
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that there's a pretty
big difference between
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those first two years and
those second two years
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if we just take base salary
and grants into account,
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and that's why we see this
on-hire bonus being awarded,
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essentially to make up that
gap in total compensation
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in the first couple of years while you're
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an Amazon employee.
Typically, you're gonna see
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that first year on-hire
stock reward is gonna be
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a little bit bigger than the
second year, which we see here
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in the graphic. And again, that's because
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in the second year, you've got 10% more
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of your stock vesting. You'll
also notice right off the bat
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that as an Amazon employee,
more of your compensation
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in year one and two is fixed, and so, more
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of it's gonna be based on just base salary
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and that on-hire reward.
The longer you're at Amazon,
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though, particularly year
three and four, much more
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of your compensation is
variable and tied directly
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to the price of Amazon
stock. So, obviously,
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if Amazon does really,
really well, well then,
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you're gonna benefit in a big way,
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and you might get paid more
than you initially thought
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that you were going to get paid,
particularly in years three
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and four, but if Amazon stock
price doesn't do as well,
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well then you might see your
total compensation remain
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relatively flat or if
the stock price drops,
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you could even see your
total compensation go down
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by a little bit. Feel free
to add me on LinkedIn,
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I tend to post a lot
of information related
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to Amazon benefits.
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I've got all of my
information right over there.
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Really, what I've talked
about today is just the tip
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of the iceberg as an Amazon
employee. If you're overwhelmed
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by the sheer number of choices
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and moving parts associated
with a new job at Amazon.
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Interested in working
with a Financial Advisor,
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please feel free to reach
out to us and use us
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as a resource. We wanna
provide great education
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for Amazon employees and do
whatever we can to help you out.
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Let us know if we can help.
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I'm looking forward to
connecting soon. Cheers.
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