Gone Are the Good Times... Amazon Employees Facing 'Half Salary Cuts'

Salary Reduction Effect with 'Base Pay + Stock' Wage System
"Please Do Not Sell Stocks, Think Long-Term" Encouragement

The salaries of Amazon employees in the United States have decreased by up to 50% this year due to the impact of stock price declines over the past year. Amazon pays a lower base salary compared to other big tech companies but compensates part of the salary with company stock, so the decline in stock prices has also lowered the overall salary level.

On the 20th (local time), The Wall Street Journal (WSJ) reported that due to the long-term decline in Amazon's stock price, this year's salaries were reduced by 15% to 50% compared to the expected amounts explained by the company to employees. According to the media, Amazon built this compensation system based on the assumption that the stock price would increase by 15% annually. In fact, Amazon's stock price rose by an average of about 30% annually from 2017 until early last year.

When the stock price rises, employees can receive corresponding benefits. However, due to worsening retail sector performance continuing from last year, the stock price fell about 35% over the past year, resulting in salaries being lower than the target level.

Amazon reportedly set this year's target stock price at $170 and paid part of the annual salary in stock. However, as of the previous trading day on the 17th, Amazon's stock price was $97.20.

Photo by Yonhap News

During the COVID-19 pandemic, Amazon's stock price surged to $188 due to increased demand for online services. However, after falling below the $100 mark in October last year, it has not recovered since.

Amazon's HR team encouraged internal managers through training materials to tell employees not to sell their stocks, saying, "Although the stock price decline has effectively resulted in a wage cut, please encourage employees to hold onto their stocks for the long-term future."

At a recent executive meeting held at Amazon's headquarters in Seattle, CEO Andy Jassy said, "These are really tough times. Even after letting go of 18,000 employees, the situation has not improved, and ultimately the compensation system is not functioning properly. But the opportunity to overcome these difficult times will surely come."

Meanwhile, Amazon stated in an email to The Wall Street Journal, "Our compensation system encourages employees to have a sense of ownership. This is why we link the company's long-term performance with employee compensation," adding, "While it involves risks due to stock price fluctuations, it has so far motivated those who intend to stay with the company for a long time."