Amazon will give an extra boost in pay to some longtime workers amid concerns over changes to its compensation policies as part of a minimum-wage increase.
The online retailer announced last week it would raise the minimum wage it paid US workers to $15 an hour on November 1, and in the UK to £9.50 an hour. As part of that change, Amazon said it was eliminating monthly bonuses and stock grants to hourly workers.
That move sparked a backlash among some longtime workers in its warehouses, who said they feared their total compensation would decrease following the pay changes. In particular, workers already making more than $15 an hour said a $1 increase they were told they would receive might not make up for the loss of the other financial benefits.
The awards of restricted stock units, which vest after two years, have proved especially valuable as Amazon’s share price has soared in recent years.
On Thursday Amazon said in a statement that it was “adjusting site by site and person by person as needed since the announcement to ensure everyone experiences the benefit of this change”.
Some workers who already made $15 or more an hour would see increases of $1.25, more than the $1 raise they were told last week that they would get. Amazon will also offer cash bonuses to workers who stay at the company a long time.
“All hourly operations and customer service employees will see an increase in their total compensation as a result of this announcement. The significant increase in hourly cash wages effective November 1 more than compensates for the phase out of incentive pay and future [restricted stock unit] grants,” the tech group said.
Amazon said the changes would make compensation “more immediate and predictable”.
The new cash bonuses replace stock grants previously issued when workers reached certain lengths of service. After five years a worker will get $1,500. After 10, 15 and 20 years, they will receive $3,000.
Why Amazon is raising workers’ wages
Amazon shares have almost doubled in value in the past 12 months alone, sending its market capitalisation briefly above $1tn in August and making it the second most valuable publicly traded company after Apple.
“Some employees have benefited from a bull market and the unusually strong appreciation of Amazon’s stock price in recent years,” the company said. “This is a good outcome for those employees, but such stock price appreciation is by no means guaranteed to continue. Stock markets and individual stocks can go up, but they can also go down.”
Amazon plans to introduce a direct stock purchase plan for employees next year.
The company’s statement this week followed pressure from Senator Bernie Sanders, an outspoken critic of Amazon. Mr Sanders had greeted the initial announcement of the new wage floor as “exactly the right thing” to do. But after employees began to raise concerns over the loss of bonuses and stock awards, the independent senator for Vermont asked Amazon to confirm that all workers would see a raise.
Analysts do not expect the wage increase to have a significant impact on Amazon’s financials. Simeon Siegel of Nomura Instinet estimated that, combined with the phasing out of monthly bonuses and stock grants, it would result in net incremental costs of $400m to $1.9bn. At the upper end that would be less than 1 per cent of the $235bn in revenue Wall Street analysts were forecasting for this year.
