Let's talk about new
Amazon employee compensation. First off, if you're
watching this, I suppose, either congratulations
on your new job at Amazon or perhaps you're going
through the hiring process. If you wanna learn more
about Amazon compensation, you have certainly come
to the right place. Before we get started, just
a very quick disclaimer. And moving right along. Right off the bat, there are really three ways in which Amazon employees are compensated. The first is base salary, this is really, really straightforward. This is simply your monthly paycheck, not a whole lot to talk about there. The second is a year one and
a year two on-hire bonus.

And then the third are
Restricted Stock Units or RSUs, these are the shares of
Amazon stock that you receive as a new employee. Let's talk a little bit
about how this plays out and look at a timeline to see how everything fits together here. Looking at a timeline of
compensation, obviously, you have your base salary, not listed on the timeline, really
straightforward, not a lot to talk about there, you're
paid each and every month. On top of that, you've got your year one and year two on-hire bonuses. Now, these for all intents
and purposes, you can think of it just like a paycheck, just like your regular base salary, not particularly complicated. If you're entitled to a
year one on-hire bonus of, let's just say $60,000, you're gonna receive $5,000 per paycheck.

Again, really, really straightforward. Now the one thing worth
noticing right here is that the year two on-hire
bonus is almost always a little bit smaller than
that year one on-hire bonus, which we'll talk about
here in just a moment when we start looking
at some real numbers. And then lastly, you have your Restricted
Stock Units or RSUs, these are the shares of Amazon
stock that you're granted when you are hired. But again, remember, you don't actually
receive these shares until the shares actually vest.
Now, based on the current Amazon vesting schedule
for a new hire, this means that you're gonna receive 5%
of your shares after year one, 15% of your shares after year two, and then 20% of your
shares every six months. So 20% of those shares
at two and a half years, three years, three and a
half years and four years. You'll also notice from this
timeline when your RSUs vest and the fact that the size of these respective vests
gets larger over time.

If you've found this helpful so far, we'd love it if you gave
the video quick like, it'll help others like you get
a much better understanding of their benefits and compensation. Moving right along. I think it's helpful to put some actual numbers behind this to understand what this actually means, and what do these percentage
breakdowns look like. Now, obviously, this
is going to vary a lot, whether you're coming in
as a new hire at level four versus somebody else who's
coming in at a level six, seven, eight, you name it.

So, while these numbers
are obviously going to be substantially
different for you versus the next person, I think that
at least the big picture idea is particularly important here. So Amazon's maximum base
salary, I should say, in 2021, outside of the Bay Area, in
Greater New York City area is $160,000. So if you
come in at a higher level, don't be surprised if you're
not starting at $160,000, you might start at $150,000
$155,000. And really, a reason for this is it gives
the manager a little bit of flexibility down the road,
to give you a little bit of a raise if you're doing a
great job, it's not the case that the manager says, "Well, hey, sorry. You've
done a spectacular job, but I can't give you a
raise because you're already at that max salary." So, it
very well could be the case that you start at, let's say $150,000, in then next year you get
bumped up to $155,000, and then let's just say
in year three and four, you get bumped up to that
$160,000 maximum base salary.

And then you're gonna receive
your Restricted Stock Units. Now, in this example, we're gonna assume that somebody was
entitled to $600,000 worth of restricted stock at their initial hire. As I mentioned earlier, at
the end of the first year, you only receive 5% of that initial grant. And so in this case, that
would be $30,000 of stock at the end of the first year.
At the end of the second year, you're gonna receive 15%, in
this case that would be $90,000 in stock.

And then each
six month time period after that you're entitled to
20% of your initial grant. So, after six months if
the price has not changed, and again, we're talking about
two and a half years in here, you're entitled to $120,000 in stock. At the end of the third
year, $120,000 in stock. Three and a half years
in, $120,000 in stock, and at the end of the fourth year, another $120,000 in stock, assuming the price has not changed. So, you'll also notice that
in years three and four, in aggregate, you're gonna receive 40% of that initial grant, and
that's going to add up to, in this scenario, $240,000
of vesting grants. Another quick thing to
note, all of these numbers, obviously, are gross, Amazon
is gonna withhold money for taxes from your
salary, from stock grants and from the on-hire
bonus. Now you'll notice that there's a pretty
big difference between those first two years and
those second two years if we just take base salary
and grants into account, and that's why we see this
on-hire bonus being awarded, essentially to make up that
gap in total compensation in the first couple of years while you're an Amazon employee.
Typically, you're gonna see that first year on-hire
stock reward is gonna be a little bit bigger than the
second year, which we see here in the graphic.

And again, that's because in the second year, you've got 10% more of your stock vesting. You'll
also notice right off the bat that as an Amazon employee,
more of your compensation in year one and two is fixed, and so, more of it's gonna be based on just base salary and that on-hire reward.
The longer you're at Amazon, though, particularly year
three and four, much more of your compensation is
variable and tied directly to the price of Amazon

So, obviously, if Amazon does really,
really well, well then, you're gonna benefit in a big way, and you might get paid more
than you initially thought that you were going to get paid,
particularly in years three and four, but if Amazon stock
price doesn't do as well, well then you might see your
total compensation remain relatively flat or if
the stock price drops, you could even see your
total compensation go down by a little bit. Feel free
to add me on LinkedIn, I tend to post a lot
of information related to Amazon benefits. I've got all of my
information right over there. Really, what I've talked
about today is just the tip of the iceberg as an Amazon

If you're overwhelmed by the sheer number of choices and moving parts associated
with a new job at Amazon. Interested in working
with a Financial Advisor, please feel free to reach
out to us and use us as a resource. We wanna
provide great education for Amazon employees and do
whatever we can to help you out. Let us know if we can help. I'm looking forward to
connecting soon. Cheers..

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