Amazon staff might get paid 50% less because shares have fallen so much

Okay, there are stupid headlines and REALLY stupid headlines. This is the latter.

There is a reason "equity components" of compensation are called "variable compensation" just like bonuses are. Anyone who "counts on them" is really setting themselves up for disappointment.

That people "believe" they are wealthier than they are because they are counting stock that they either don't have, or hasn't vested yet, at face value? Well that problem is quite old.

During the dot com meltdown, so many people put down payments on houses that they were going to buy with "stock options" but didn't exercise the options because once they do that, they would "stop going up." Our neighbor who was a realtor, has 8 houses "fall out of escrow" because the buyer withdrew (giving up their good faith money) before the close during 1999.

Stock based compensation == 0 until it is sold and the taxes paid, then it is worth what ever you were left with. But counting it as "income" before you sell it? Not smart.

Years ago, my neighbor would always refer to his car as his "quarter million dollar Oldsmobile". I finally got curious enough to ask him the origin of the name, as the car didn't look like a high dollar collector car to me.

He laughed and said that's what his stock options would have been worth today if he hadn't sold them to buy the Olds.

It's the old story ... don't count the money until the check has been cleared and the balance is in your account. Until then it's just a dodgy IOU. Same for all forms of paper "wealth".

I had a 1.6M$ Chrysler Concorde :-) I sold 1000 shares of SUNW in December 1994, which gave me enough money to buy it for cash, which was really a huge deal for me. The stock then proceeded to split twice.

On the flip side, when Freegate was acquired, I took some of the stock I had that wasn't "locked up", sold it to buy a Subaru Forester for cash in 1999. Two years later that car was worth about $87.50. (at the value of the stock).

Those experiences definitely helped me appreciate that Stock != Cash.

Take it one step further. Don’t count the money until you’ve used it to purchase something.

Until then whatever value it has or whether it even exists at all is theoretical.

Amazon regularly adjusts RSU grants up and down to keep any given employee's total comp within a band. The story is that they are electing not to do so this year, despite last year's significant price drop. The net effect is the same as an across-the-board pay cut.

While you're absolutely right, I can tell you first-hand that managers at Amazon tell their engineers that if the stock falls, they'll get more stock.

Furthermore, Amazon has a "target compensation" value for every employee, and this target implicitly assumes a 15% YoY gain in stock price. When employees with RSUs are given their compensation breakdown, they don't get to see the target comp, but they do see their expected compensation listed as part of their "total compensation."

So, yes, you're right that people shouldn't be counting their chickens before they're hatched -- but Amazon strongly encourages employees to do so, and pretends that the chickens are fully hatched during compensation reviews.

Source: Spent almost six years working at AWS.

Okay, RSUs are an even bigger con. Google used RSUs in much the same way when I was there and it wasn't common knowledge (they were a bit less forthcoming about how your "RSU multiplier could be less than 1.0, even 0.0.") and when I was talking with an employment lawyer about them (at the time is was more focused on the employment agreement they were trying to get me to sign an "updated version" of) they suggested that NLRB action could probably help shed light on their wage schemes.