Amazon will boost its maximum base pay to $350,000 for corporate and tech employees, from $160,000 previously, as part of an overall increase in total compensation intended to help recruit top talent and retain existing employees.
The move promises to bring Amazon’s base pay more in line with other big tech companies, including Google, Facebook, Apple and Microsoft. Historically, Amazon has kept its base pay lower than many of its peers have, making up the difference with restricted stock units and cash compensation such as a sign-on bonus, paid over two years.
Those additional components of compensation will remain in place. Amazon says it’s “increasing overall compensation ranges for most jobs globally, and the increases are much more considerable than we’ve done in the past.”
Amazon announced the plan to employees Monday morning in a post on its internal corporate site. GeekWire viewed the post and confirmed its accuracy with Amazon.
“This past year has seen a particularly competitive labor market and in doing a thorough analysis of various options, weighing the economics of our business and the need to remain competitive for attracting and retaining top talent, we decided to make meaningfully bigger increases to our compensation levels than we do in a typical year,” the company said in the internal post.
Amazon is currently in the middle of its annual performance evaluation process, known internally as “Forte.” It’s the first review cycle since Andy Jassy became Amazon CEO last year, succeeding founder Jeff Bezos.
A report by Insider last year cited high turnover among Amazon’s corporate leaders in the build-up to the CEO transition, and the site reported in December that the company was considering compensation changes in response.
The increase in the base pay cap is notable in part because it’s less volatile than stock awards tied to fluctuations in the company’s share price. Amazon shares are down 15% from their peak in July 2021, even after a 13.5% jump in the share price on Friday, the day after the company’s fourth-quarter earnings report last week.
In its earnings report, Amazon’s operating profit was down by nearly half year-over year, to $3.5 billion, due in part to higher cost of labor in its warehouse and logistics network. The company said its costs were $4 billion higher due to higher wages, inflation and supply chain challenges.
Amazon declined to provide an estimate for the increase in its total compensation expenses expected to result from the newly announced boost for corporate and technology workers.
“As compensation is unique for each employee (considering their performance, job family, and market conditions), these updates to the base pay cap and the total compensation ranges will affect every employee differently,” Amazon said in the internal post.
In addition to increasing base pay and compensation range, Amazon announced changes in the timing of compensation for employees when they are promoted. Managers will review compensation at the time of a promotion, and issue additional stock awards mid-year as warranted, rather than waiting until the next annual compensation cycle, “to better align newly promoted employees with the compensation range of their new level.”
Previously, base pay was adjusted at the time of a promotion but not stock awards.