Amazon has announced a major overhaul of its compensation model, shifting its focus toward rewarding long-time top performers while reducing payouts for first-time high achievers.
The revised salary structure, which takes effect in 2025, aims to distinguish between employees with sustained excellence and those with fluctuating performance records.
Under the new guidelines, veteran employees who have consistently earned Amazon’s “Top Tier” performance rating for four consecutive years will now receive 110% of their pay range, surpassing the previous cap of 100%.
Meanwhile, first-time Top Tier recipients will see their payout reduced to 70% of their pay band, down from 80% last year.
Key Changes in Compensation Model at Amazon
Amazon’s revised pay structure introduces significant changes in how employees are rewarded based on their performance history.
The updated model places greater emphasis on long-term achievements, ensuring that consistent top performers receive higher payouts.
- Employees moving from lower ratings to Highly Valued 2 (HV2) will now receive 10% of their pay range, down from 20%.
- Those dropping from Highly Valued 3 (HV3) to HV2 will retain 20%, reflecting Amazon’s increased focus on past achievements.
- First-time HV3 recipients will receive 40% of their pay range, instead of 50%.
- Employees with two consecutive Top Tier ratings will now receive 90% of their pay band, slightly down from 100%.
Amazon’s compensation overhaul mirrors broader trends in the tech industry, where companies like Google, Microsoft, and Meta have also tightened their internal review processes and reduced rewards for underperformers.
Employee Reactions and Transparency Concerns
While Amazon claims the new model ensures a steadier compensation progression, employees have raised concerns about transparency.
The company’s internal pay guidelines prohibit managers from disclosing individual Overall Value (OV) ratings, forcing employees to infer their performance based on compensation changes.
Additionally, Amazon will continue its pilot program, allowing employees to convert up to 25% of their stock grants into cash, addressing concerns from workers seeking more immediate financial returns rather than stock-based compensation.
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