Amazon’s senior managers and other senior leaders won’t receive cash pay raises this year, Fortune has learned, eliminating a key reward for top employees at the online retailing giant.
Some of these employees may receive additional company stock, but that’s not guaranteed.
Amazon compensation staff have started notifying some leaders about the changes and explaining this year’s policy.
The move applies to employees whose roles are classified internally as Level 6 or higher, which is more or less middle management and above. But Level 6 roles also include some individual contributors, such as senior software engineers. The compensation update applies to all employees at these levels, whether they are in office desk jobs or in managerial roles inside Amazon facilities such as fulfillment centers.
Historically, total compensation packages for many Amazon corporate employees consist of a larger ratio of stock compensation than at other tech companies. As such, Amazon spokesperson Margaret Callahan made clear in a statement the company’s belief that senior Amazon employees have already benefited greatly from Amazon’s share price increase of around 80% over the past 12 months.
“Amazon’s compensation philosophy emphasizes ownership, which means that a portion of employee compensation includes RSUs,” Callahan said in the statement to Fortune. “The more senior you are in the company, the more your compensation includes RSUs than cash base pay. Due to the growth in Amazon’s stock price over the past year (approximately 77%), many employees’ compensation will meaningfully exceed the amount that the company planned for them to earn when we set compensation last year and in prior years’ compensation cycles. As a result, for this year’s compensation cycle, we are prioritizing cash base pay increases for employees whose compensation is weighted more heavily in base pay as opposed to stock.”
Translation: The more senior you are, the lower likelihood that you will see a cash payment. Some Level 6+ employees could still see a cash base increase if they were recently promoted or moved laterally into a completely new role. There is a chance that some employees at Level 6 or above will receive additional restricted stock units, or RSUs, this year, but that is not guaranteed. For those Level 6 and Level 7 employees who do receive new RSUs, they will vest quarterly like they do for Level 8 employees and above, rather than just twice a year.
The compensation update comes as Amazon leaders under CEO Andy Jassy continue to look for ways to trim unnecessary costs and increase profitability, while investing in growth areas such as generative AI. On Wednesday, Amazon announced a new $2.75 billion investment in the AI company Anthropic, adding to an earlier $1.25 billion investment in the company.
Over the last couple of years, Amazon under CEO Andy Jassy has laid off more than 27,000 corporate employees while he focuses on investing in fewer, bigger bets. Amazon generated the largest quarterly operating profit in its history—$13.2 billion—in the fourth quarter of 2023.
Are you an Amazon employee with thoughts on this topic or a tip to share? Contact Jason Del Rey at jason.delrey@fortune.com, jasondelrey@protonmail.com, or through secure messaging app Signal at 917-655-4267. You can also message him on LinkedIn or at @delrey on X.
