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News > World

Amazon Cuts Monthly Incentives, Stock Awards After Salary Increase

  • The Amazon logo is pictured inside the company's office in Bengaluru, India, April 20, 2018.

    The Amazon logo is pictured inside the company's office in Bengaluru, India, April 20, 2018. | Photo: Reuters

Published 4 October 2018

The company is eliminating incentives to enable a pay raise. Several employees have criticized the move, stating they would lose thousands in incentive pay.

Amazon, the multinational online retail giant, announced Tuesday that it will increase wages for workers in the United States to US$15 per hour. However, a report published by Bloomberg Wednesday revealed that along with the move, which received widespread praise, the company will eliminate monthly bonuses and stock awards for warehouse workers.


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Currently, warehouse workers in the U.S., are eligible for monthly bonuses that could total hundreds of dollars per month as well as stock awards, said two people familiar with Amazon’s pay policies.

The company, to help pay for the pay raise, would eliminate these bonuses. Several Amazon warehouse employees have criticized the move, stating they would actually be losing thousands in incentive pay.

The warehouse workers currently get two shares of Amazon stock when they get hired, valued at US$1,952.76 per share, and an additional stock option each year. After the new changes, the restricted stock units (RSU) program will be phased out for stocks that become vested in 2020 and 2021, and will be replaced with a direct stock purchase plan by the end of 2019.

An Amazon worker told The Verge that the news was devastating to the employees, most of whom depend on the RSU and variable compensation payment (VCP) incentives. The VCP incentives, which is depends on performance, could get Amazon workers an eight percent monthly bonus, and a 16 percent bonus during the holiday seasons in November and December.


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Following sustained public and legislative pressure, Amazon announced Tuesday that more than 250,000 full-time, part-time and temporary employees and 100,000 seasonal workers in the United States will receive a salary increase. Approximately 17,000 workers in the United Kingdom are also expected to receive salary increases. This new minimum wage is to take effect from Nov.1.

In the past, Amazon has come under fire from critics, including independent Senator Bernie Sanders, who said that the company doesn't pay enough to its workers. In early September, Sanders introduced a bill, namely the Bezos Act (Stop Bad Employers by Zeroing Out Subsidies), which would tax corporations like Amazon, Walmart, and United Airlines, for every dollar that their low-wage workers receive in government health-care benefits or food stamps.  

The wage increase garnered applause from Sanders who said, “I want to give credit where credit is due. I want to congratulate Mr. Bezos for doing exactly the right thing.”

Many Amazon workers responded to Sanders’ tweet mentioning that the pay increase will actually come with more cuts than a raise. They have criticized the move as a publicity stunt by Jeff Bezos, the richest person alive worth an estimated US$165 billion.

The company argues that the pay raise is in workers' interest. ”The significant increase in hourly cash wages more than compensates for the phase-out of incentive pay and RSUs,” Amazon’s spokesperson told CNBC “We can confirm that all hourly Operations and Customer Service employees will see an increase in their total compensation as a result of this announcement. In addition, because it’s no longer incentive-based, the compensation will be more immediate and predictable.”

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