David got a job offer from Amazon in April 2013. His job level is Software Development Engineer (SDE) level 2.
He has an undergraduate degree in Computer Science, and he had 8 years of work experience before he joined Amazon’s office in a major city in the east coast.
Below is his job offer details:
- Base salary: $150,000
- Sign on bonus: $142K for two years. He received half of it when he started, and received the second half in the beginning of year 2.
- Restricted Stock Units: 550 Shares. Vesting Schedule: 5% year 1, 15% year 2, 40% year 3 and 40% year 4
Amazon’s historical stock price:
|Date||Amazon Stock Price|
Let’s calculate David’s total compensation:
- David sold his RSUs at end of each year immediately after the shares were vested. He could have made a lot more because Amazon’s shares had appreciated 3X from 2014 to 2017 but nobody could predict the future.
- David will get a small salary increase each year. We didn’t include any salary increase. Unless he gets a major promotion, the salary adjustment is probably around 3%.
|Total Compensation||YoY Growth|
A few observations:
- David’s total compensation has grown very nicely due to the tremendous appreciation of Amazon stock.
- Amazon’s stock vesting schedule is very different from most other high tech companies. The 5%/15%/40%/40% vesting schedule is designed to keep people stick around.
- The sign-on bonus is another feature of their job offer to lock people in (if you leave early you have to pay back portion of the sign on bonus.)
- If David has kept all of his stocks without selling anything until end of year 4, his 550 shares would have worth $508,744 (half million dollars)!
No wonder recently Warren Buffet admitted he missed investing in Amazon — here is his quote — “I was too dumb to realize. I did not think [Bezos] could succeed on the scale he has,” Buffett said, adding that he “really underestimated the brilliance of the execution.”
Each month, I share updated Amazon/Google/Facebook/Microsoft/Apple offer information (base + sign on + stock options/RSUs) with my newsletter subscribers. This is based on real-time data and insights I collected from my coaching clients who recently landed offers at these top-tier employers. Click here to sign up for the newsletter.
If you want to get hired at Amazon, check out 2019 edition of How to Get A Job at Amazon!