New Amazon Tier One employees receive a small number of restricted stock units (RSUs) within the first month of hire. These shares are set to vest after two years of continuous service. For every year of continuous service, an employee receives another small number of shares of restricted stock, always vesting two years of service later. For example, I received four shares on 8/27/14 set to vest on 8/31/16. I received four more shares on 4/2/15 set to vest on 7/1/17. I received three shares on 4/7/16 set to vest on 6/16/18.
Like VCP (variable compensation pay), these restricted stock units give the impression of compensation with little actual payout. I received my initial four RSUs on 8/27/14. At the time, they were worth in the neighborhood of $325 each, around a thousand dollars total, yet with zero vestment, their value was and remained zero until I made it to two years of continuous service. After two years of service, the shares were distributed to me on 8/31/16, free and clear, after considerable tax penalties. The stock price at that time was $765. RSU distributions are heavily taxed, at around one third. So, my net distribution was $1,927. It appears there is no way to roll over the entire value, deferring taxation. So, after two years, I received net stock worth around four week’s gross pay or about $963 per year or about $80 per month. Or, at a conservative estimate of 2,200 hours per year, about $.44 per hour.
I have noted above that very few Tier One employees ever make it to two years of continuous service. Few Tier One employees ever claim their stock shares. In orientation and All hands meetings, the company gives examples of the employee who has worked for two years and receives large VCP payouts and stock. Both of these are rare, but the stock payouts are exceedingly so. Anecdotally, I would put the number of new-hire full-time Tier One associates who ever receive vested stock shares at less than five percent. I don’t have the data.
The company uses the illusion of company ownership to attempt to manipulate employees. Managers will often note in stand-up meetings, “We are all shareholders in the company.” And, “Good news for everyone! Today Amazon stock is up to [x] dollars per share!”
One manager confided in me that he hates it when he has to say Tier One employees are shareholders. Interestingly, he said this, not because so few ever receive stock, but because it is a token amount that is then heavily taxed.
Amazon VCP and RSUs are code for: We’re going to pay you on the back-end, not on the front-end, and there is a good chance you are never going to see it.
I was glad to receive my stock on moral principle alone. For me or any other Amazon employee who sticks it out for two years, it is a small reward, but I’ll take it! Amazon Tier One employees are generally not in a position to roll these insignificant stock distributions into investments. Several employees I know have sold their stock shares to pay for badly needed vehicle upgrades and family emergencies.
For the very few workers who last two years at Amazon, getting a few shares of stock is great. Who wouldn’t want it? But the restricted stock program should never replace or interfere with a living hourly wage for Tier One hourly workers. Hourly workers need immediate compensation for immediate work provided to the company. RSUs, for the hourly employee, should always be supplemental to, not a replacement for, a living wage. Amazon should compensate Tier One employees with a living wage even if it means discontinuing the RSU program for Tier One employees. The RSU program, for the majority of Tier One workers, is already meaningless.