Amazon is doubling down on its efforts to retain talent and attract new hires by increasing its cap on base cash compensation to $350,000, more than double the previous amount, according to an internal announcement. The company cited “a particularly competitive labor market” as the reason for the move, which was only for salaried corporate and tech workers.
Amazon previously capped its pay for tech and corporate employees at $160,000 in most parts of the United States, favoring stock compensation that vests over several years for the rest of an employee’s pay package.
The announcement follows a wave of departures at Amazon’s senior levels, where compensation is heavily weighted in stock. Its cash salary cap was far lower than that of other major technology companies and a source of frustration for its workers. While Amazon’s earnings have been strong, the company’s stock is down over 4% in the past year.
The changes to compensation come during the first annual pay review cycle since Andy Jassy became chief executive last summer. As the former leader of Amazon’s cloud computing division, Jassy is well aware of the importance of attracting top talent in a highly competitive labor market. Amazon has seen significant growth over the past year, adding more than 300,000 employees to its workforce, bringing its total number of employees to over 1.6 million.
Despite the compensation overhaul, some employees remain skeptical, with several workers telling Insider that the raises don’t amount to much of a boost, especially given record inflation rates. Prices for consumer goods have risen nearly 8.5% in the past year, according to the Bureau of Labor Statistics.
While Amazon’s compensation increases are much more considerable than what it has done in the past, the company did not specify if the increased cash compensation would be paired with lower stock awards.
While the move may help the company retain talent and attract new hires, Amazon may need to continue to reevaluate its compensation structure to prevent further employee departures in a highly competitive labor market.
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