Amazon.com Inc has announced that it will reduce the stock awards for its employees as part of its compensation plan, citing an uncertain economy. The decision comes after a second round of mass layoffs at the company and in the technology sector in general due to a tough economic climate.
The reduction in restricted stock units (RSUs) is set to affect the final outlook year, although the company has not specified the period. The compensation plan will be reevaluated in the first quarter of next year to “plan for stock variation”, according to Business Insider.
Amazon spokespersons said that the company was considering the possibility of adjusting its compensation model in the future to balance base cash compensation and equity after considering the uncertain economy and the company’s compensation budget.
The company’s shares have gained over 20% this year, following a nearly 50% tumble in 2022.
The company’s decision to reevaluate its compensation model indicates that it is looking to balance cash compensation and equity to maintain employee satisfaction while ensuring a stable financial future.
The reduction in RSUs is a significant change to Amazon’s compensation plan, as stock awards make up a considerable portion of the company’s compensation for employees.
The move could affect the company’s ability to retain top talent, as employees may be more inclined to seek employment with competitors that offer more attractive compensation packages.
Amazon takes cost-cutting measures
Moreover, Amazon’s decision to reduce stock awards is a sign that the company is preparing for a long-term economic downturn. The uncertainty surrounding the economy due to the pandemic has prompted companies across various sectors to adopt cost-cutting measures, including layoffs and reductions in benefits.
The reduction in stock awards is one such measure that could affect the morale of employees, as stock options are seen as a valuable perk. While the decision may negatively impact employee morale, the company’s efforts to balance cash compensation and equity could lead to a more stable and sustainable compensation model in the future.
The move also highlights the importance of cost-cutting measures in response to the pandemic-induced economic crisis and the need for companies to remain agile in the face of uncertainty.
The decision by Amazon to reduce employee stock awards may have a significant impact on its employees. RSUs, or restricted stock units, are a form of compensation that give employees a stake in the company’s success.
When the stock price rises, the value of RSUs goes up, giving employees a financial incentive to work harder and contribute to the company’s growth.