Amazon should just own this mistake. They are already finding it incredibly hard to recruit and attract top talent. Perhaps the situation is slightly improved with the recent cooldown in the economy. I wonder how much this negative PR costs their recruiting efforts when compared to the cost of paying up the erroneous bonuses.
Amazon walking back raises after internal bug miscalculated compensation
11–20 of 175 posts
Re: Amazon walking back raises after internal bug miscalculated compensation
#12It looks like what happened is employees got a fixed number of RSUs. Their pay letter assigned a hypothetical value to those shares based on an incorrect stock price. So Amazon is probably not changing anything in the raise itself but rather correcting the hypothetical future value of the RSUs.
Why would they get a fixed number of RSUs. I have always seen them assigned in dollar value, usually as a % of dollar salary
In your compensation letter it may say a $ value but it’s just a formulaic presentation based on the fixed # of RSUs.
You’re not compensated by “You’re getting $20,000 in however many RSUs that can buy at the time”. It’s “you’re getting 100 RSUs” and then whenever you get them your compensation letter states their current $ value.
Re: Amazon walking back raises after internal bug miscalculated compensation
#13No post body was provided.
Re: Amazon walking back raises after internal bug miscalculated compensation
#14It looks like what happened is employees got a fixed number of RSUs. Their pay letter assigned a hypothetical value to those shares based on an incorrect stock price. So Amazon is probably not changing anything in the raise itself but rather correcting the hypothetical future value of the RSUs.
But from the employee side, RSUs are usually communicated (and reasoned about) in dollar amount, with the undersanding that one is getting a number of shares corresponding to that amount. So even if it's an honest miscommunication, it's still a painful one.
Then that is a misunderstanding by the employee about how their compensation works. It’s little different than owning stock. I could say “I own $5000 in Amazon stock” but I still know it actually means I own $X shares while the dollar value is variable.
Re: Amazon walking back raises after internal bug miscalculated compensation
#15It looks like what happened is employees got a fixed number of RSUs. Their pay letter assigned a hypothetical value to those shares based on an incorrect stock price. So Amazon is probably not changing anything in the raise itself but rather correcting the hypothetical future value of the RSUs.
Why would they get a fixed number of RSUs. I have always seen them assigned in dollar value, usually as a % of dollar salary
RSUs are always granted as a number of shares. It's kind of the point of them, so the employee benefits from stock appreciation since their hire date.
However, in offer paperwork, it will sometimes be stated as a dollar value. This is for two reasons: the first is that RSUs need to be approved by the board at a meeting, which can happen some time after the hire date, at which time the dollar value is converted into shares.
But the main reason is that it makes it easier for the candidate to understand the value of the RSUs, and lets the company then talk about the total compensation and try to treat RSUs like cash in that discussion.
Re: Amazon walking back raises after internal bug miscalculated compensation
#16The article is kinda useless without amounts… if I got a 4% raise and it got walked back to 2% I’d be pissed, but if I got a 40% raise, I’d expect it to have been a mistake.
Re: Amazon walking back raises after internal bug miscalculated compensation
#17Imagine if this wasn’t a bug, but a way to pull the wool over people’s eyes to walk back legitimate raises and stop the hemorrhaging from poor business choices.
Is there anything you can do in either scenario? It seem like one scenario invites legal scrutiny, whereas the other is just an an unfortunate accident, we’re so sorry about the bug…
Re: Amazon walking back raises after internal bug miscalculated compensation
#18So it's likely that previous bonuses/raises were also based on 'old' stock prices. But since Amazon stock was (pretty much) always increasing, this means that those bonuses were consistently lower than what they should've been. Of course it's only an issue now when the opposite is true, and is costing Amazon rather than the employees.
Ha ha, back in the late 90's, Apple took away profit sharing as soon as there was a profit. Specifically, I should say, Steve Jobs took away profit sharing.
Re: Amazon walking back raises after internal bug miscalculated compensation
#19Earlier quoted context omitted.
But from the employee side, RSUs are usually communicated (and reasoned about) in dollar amount, with the undersanding that one is getting a number of shares corresponding to that amount. So even if it's an honest miscommunication, it's still a painful one.
Then that is a misunderstanding by the employee about how their compensation works. It’s little different than owning stock. I could say “I own $5000 in Amazon stock” but I still know it actually means I own $X shares while the dollar value is variable.
It depends how the comp statement is written.
"Salary: $180k. RSUs: $80k (100 shares)"
VS
"Salary: $180k. RSUs: $80k"
With the former, I can easily spot check the share price and make sure it's correct. With the latter, I cannot, and take it at face value.
Re: Amazon walking back raises after internal bug miscalculated compensation
#20So it's likely that previous bonuses/raises were also based on 'old' stock prices. But since Amazon stock was (pretty much) always increasing, this means that those bonuses were consistently lower than what they should've been. Of course it's only an issue now when the opposite is true, and is costing Amazon rather than the employees.
When I was last there (albeit 6 years ago), following reviews managers determined what your new “total yearly comp” would be. Base pay was pretty low compared to industry, but RSUs were used to make up the difference based on the price on a certain date with a 4-year vesting period, distributed quarterly (16 distributions).
For example, if your total comp required 20k extra per year and the stock price was $100, you’d be granted 800 shares. If the stock price had fallen to $80, you’d be granted 1,000.
We always wanted the stock price to have a temporary low around review season because that would benefit our RSU grant.
Any dollar amount assigned to the grant on the given review date was understood to be based on the current stock price, subject to change, and as a way to communicate total comp. If the stock dropped over the course of the year, there was occasionally corrections, either in base pay or RSUs. This was also complicated by the fact that you could have up to four years of grants stacked on top of one another, all vesting on the same schedule. Obviously, that was taken into total comp calculations, so if you got lucky with a low price and big grant in the past four years, your yearly grant might end up low as a result.