Amazon slashed stock options and incentive-based bonuses for some employees when it raised its minimum wage to $15 per hour this week, but the e-commerce giant insists workers will be better compensated under its new policy.
The company is phasing out restricted stock units, or RSUs, as a form of compensation for hourly customer-service and warehouse employees. The options guaranteed employees a future slice of Amazon’s stock at a time when individual shares are valued at more than $1,950. Warehouse employees will no longer receive monthly incentive-based bonuses if their facilities hit production goals.
“The significant increase in hourly cash wages more than compensates for the phase out of incentive pay and RSUs,” an Amazon spokesperson said in a statement. “We can confirm that all hourly Operations and Customer Service employees will see an increase in their total compensation as a result of this announcement. In addition, because it’s no longer incentive-based, the compensation will be more immediate and predictable.”
Amazon has yet to disclose the financial impact it expects the new pay initiatives to have on its bottom line. However, the phasing-out of the stock options and incentives should offset some of the costs associated with the wage hike.
The e-commerce company isn’t entirely eliminating stock as a form of compensation for employees. Rather than receive RSUs, hourly workers can participate in a stock purchase program.
Roughly 350,000 employees, including 100,000 seasonal workers, will have their hourly pay rate raised to $15 per hour. Hourly workers already earning $15 per hour will receive a slight increase.
Amazon received widespread praise for its decision to raise its minimum wage, most notably from Sen. Bernie Sanders (D-VT), who is among the company’s harshest critics.