Amazon employee stock award is the highest in the competitive job market

  • Amazon is expected to spend $6 billion on employee stock awards in the second quarter, up 66% from a year ago — both of which are all-time highs.
  • The increase is largely due to inflated wages and a competitive job market, Amazon Chief Financial Officer Brian Olsavsky said during an earnings call Thursday.
  • Amazon has struggled with high turnover and complaints of low wages in recent years.

Amazon is giving employees a record amount of stock awards in a bid to retain workers at companies amid high inflation and a competitive job market.

During the second quarter alone, which ends in June, Amazon is on track to spend a record $6 billion on stock-based compensation expenses, the company’s chief financial officer, Brian Olsavsky, said during Amazon’s latest earnings call on Thursday. That’s the highest quarterly amount ever spent on employee stock awards, and a record jump of 66% over the same period last year, according to company filings.

Amazon’s compensation, like many tech companies, usually consists of a combination of cash base salary and stock bonuses. But Amazon’s flat stock price in recent years has reduced the potential for a pay rise, leading many frustrated employees to consider other job offers, Insider previously reported.

Olsavsky blamed record inflation and a competitive labor market for the company’s decision to increase its stock grants. He also cited a “seasonal increase” because most Amazon employees receive their annual restricted stock unit grants in the second quarter.

Even with that in mind, the increase is staggering: Amazon has never spent more than $3.7 billion in quarterly employee stock awards, and the estimate for this quarter is nearly double the $3.2 billion it spent in the previous quarter.

“We expect to see stock-based compensation expenditures of approximately $6 billion, up from $3.3 billion in the first quarter, largely reflecting wage inflation as we continue to hire and retain employees in areas of high demand, including Engineers and other technology workers. during the call.

An Amazon spokesperson confirmed the records, but declined to make a statement for this story.

Mark Mahaney, Evercore’s senior managing director, told Insider that the change is “a pretty big indicator of strong wage inflation” across the board. The nearly $3 billion increase in employee stock awards last quarter was one of the main reasons why Amazon’s second-quarter operating income forecast was lower than Wall Street’s estimate on Thursday.

“It’s a surprisingly large number,” Mahani said.

Amazon stock fell nearly 12% after Thursday’s earnings report that showed slowing demand and growth. The company highlighted additional costs of $6 billion related to inflation, lost productivity, and overcapacity. The company expects these costs to fall to about $4 billion in the second quarter.

The explosive growth in employee stock awards comes at a time when Amazon is struggling with an intense employee turnover across its company workforce. A combination of Amazon’s relatively low base pay, stagnant stock price, and reputation for a tough workplace has led to a spike in employee leave last year, with some teams reporting a massive 35% attrition rate. At least 50 vice presidents left Amazon last year, with a turnover rate of more than 10% at that level, according to an Insider analysis.

To address some of those concerns, Amazon has more than doubled its maximum base pay to $350,000, with pay scales expanding for many roles this year. Some employees have seen a pay increase of up to 90% this year, although not everyone is satisfied with their new pay, with some seeing single-digit increases, Insider previously reported.

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