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March 14, 2021

Amazon Salary Negotiation

The goal of this guide is to equip you with the essential pieces of information you need for your upcoming Amazon negotiation. If your situation is unique or you want 1:1 support to ensure you maximize your compensation, please sign up for a free consultation with our expert negotiators.

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Table of Contents

Amazon Offer Compensation Components

Before starting any negotiation, it is critical you fully understand the compensation components offered. A typical job offer for a tech role at Amazon (e.g. Software Engineer) should contain the following monetary components:

This is what an example Amazon offer looks like over a 4-year period:

Note: Amazon yearly total compensation is actually usually higher in year 1 and 2 because they informally factor in 15% yearly stock appreciation. This is certainly a bold assumption and we would recommend against including that when comparing offers.

The high-level overview of compensation is certainly helpful, but there is a lot of important nuance for each of these components that is quite different at Amazon compared to companies like Facebook and Google.

Base Salary

Amazon is the only big tech company to implement a strict base salary cap. In Seattle, the base salary cap is $160K and recruiters will frequently remind you that Jeff Bezos is subject to the same salary cap. This is impossible to increase, which means if you are looking at a Seattle offer with base salary that is already close to $160K, you are much better served by negotiating the signing bonus and RSU components. For reference, New York and San Francisco have slightly higher caps with $185K as the maximum base salary.

Year 1 and 2 Signing Bonus

Amazon is also unique in offering a year 1 and year 2 signing bonus. The reason Amazon offers this is actually related to a separate component, RSUs, which we will cover in detail shortly. But the quick summary is that Amazon only pays out a small portion of equity in year 1 and 2, and as a result, they offer signing bonuses in both years to ensure comp is similar across all 4 years (see note above).

Recruiters and hiring managers typically have quite a lot of flexibility to increase the signing bonuses. In some situations with highly competitive candidates, we have seen these numbers double from initial to final offer.

These signing bonuses are paid on a monthly basis throughout the first 2 years and are not **clawed back (i.e. you do not have to repay the money you have earned) if you leave during that 2-year period. This point is frequently incorrect in other articles, so we've included the wording we've seen in all our Amazon offer contracts:

"In appreciation of your decision to join us, you will be eligible for a sign-on payment of$151,000.00. This sign-on payment will be issued in prorated pay period installments as youcomplete your first year of employment with the Company. Each installment will be earned at thetime of payment. If your employment with the Company is terminated for any reason prior to thefirst anniversary of your Start Date, you will receive one final prorated installment based on thedays worked in your final pay period. No additional installments will be paid."

As a final point, this bonus is taxed as regular, not special income, which can be a tax benefit.

Equity (RSUs)

Many big tech companies vest RSUs evenly over 4 years. This means if you are granted $400K RSUs you will receive the following:

This is true at companies like Facebook and Google. Additionally, those companies have multiple vesting dates during the year. At Facebook, many offers have equity that vests every 3 months and at Google it is possible for equity to vest every month!

However, Amazon does not follow this approach. Amazon RSUs vest 5% in year 1, 15% in year 2, 40% in year 3, and 40% in year 4. Below is the specific wording from an Amazon offer contract:

" Subject to approval by the Board of Directors of Amazon.com, Inc., you will be granted a restricted stock unit award with respect to 97 shares of Amazon.com, Inc. common stock. This award will vest and convert into shares of common stock over four years, as follows, subject to your continued employment with the Company:

Another aspect that is unique is Amazon quotes equity values in number of shares rather than the dollar value. In order to compare to other offers, simply check the current stock price and multiply by number of shares. The actual value will be 30-day average stock price before start date, but this is a good approximation. Additionally, Amazon does round down when calculating how many shares vest in year 1, 2, and 3, though that will be remedied in the final year. Since the share price is ~$3000, one share can make a non-trivial difference to your yearly payout.

Performance Bonus

Yet another anomaly with Amazon compensation is their performance bonus. At most big tech companies, performance bonuses are relatively predictable. For example, Google targets a 15% performance bonus for L5 software engineers, and ~85% of engineers receive at least that amount. However, this is not the case at Amazon. If pressed, recruiters will eventually disclose that only a small percentage of top performers at Amazon receive a performance bonus. Most Amazon offer letters don't even include a section outlining the target performance bonus.

You should certainly factor in the target bonus at other companies when comparing competing offers against Amazon, if those companies are known for typically paying out their target bonus.

Stock Refreshers

Stock refreshers are also infrequently offered at Amazon. Like all companies, they are dependent on your performance review and while they do exist at Amazon, they are fairly rare (especially at junior levels) and are typically a much lower dollar value than at other big tech companies.

Amazon Negotiation Process

Candidates often find it helpful to have a high-level overview of the negotiation process. However, this does vary by candidate, with one key vector being seniority. It's helpful to split into junior (L4 and L5) and senior levels (L6+).

Since we are on the topic of levels, it's worth mentioning that Amazon does not follow the standard leveling conventions. Below is the mapping to Google and Facebook levels:

Amazon L4 = Facebook/Google L3Amazon L5 = Facebook/Google L4Amazon L6 = Facebook/Google L5Amazon L7 = Facebook/Google L6

Most recruiters are fairly transparent about this. However, if you are discussing cross offers it's often helpful to just say "Facebook and Google have placed me at the senior software engineer level, Amazon L6", to avoid scenarios where the Amazon recruiter claims that Amazon L5 = Google L5, which is false.

If you have not yet received an offer from Amazon there are a few critical mistakes to avoid:

  1. Do not share your current compensation. In many states (e.g. California) it is illegal for companies to ask this, so you are certainly within your rights to say "I do not feel comfortable sharing that information".
  2. Do not share your compensation expectations. Amazon recruiters will sometimes frame this as "seeing if you are a fit for the role". However, it is in your best interest to deflect this question until Amazon has extended an offer. One possible response is "right now I'm focused on the interview process and don't have a number in mind, but I'm confident we will be able to get to a number that works for both of us."

With that out of the way, let's discuss the process for Amazon L4/L5 tech employees.

  1. After finishing up your onsite, you will typically hear back from a recruiter within ~1 week
  2. A recruiter will reach out to setup a call. Often saying something along the lines of "I have some exciting news to share". This is the offer call
  3. On the offer call, the recruiter may push you for compensation expectations. But if properly deflected, at this level they are often willing to give an initial offer
  4. Amazon likes to move fast and will often push you to make a decision within a week
  5. We recommend you take time to digest the initial offer and consider the best point of leverage for your counter offer discussion
  6. You will then setup your second call with the recruiter to discuss the offer. On that call you will disclose your counter offer. The recruiter will likely push back and at Moonchaser we build a tree diagram unique to your situation with the most likely objections and the optimal responses to those objections. The goal is to get the recruiter to take your counter-offer number back to the hiring manager + VP as needed
  7. Typically you will hear back in a few days with their "final" offer

There are two primary differences between junior and senior negotiations at Amazon:

  1. Recruiters will rarely provide an initial offer. Given the importance of senior leaders and the wide range of the salary bands, they are typically hesitant to risk losing a candidate. This means the first number you provide is hugely important for anchoring the negotiation
  2. Senior employees are also likely to see less deadline pressure than more junior employees. Generally speaking, recruiters working with these candidates provide more of a white glove service

Amazon-Specific Negotiation Advice

Here are some important pieces of information to keep in mind when negotiating your Amazon compensation.

Location matters (as you'd expect): Amazon tier 1 compensation bands are for San Francisco and New York. Amazon tier 2 compensation bands are Seattle and southern California (incl. Los Angeles and San Diego). This impacts the bands for all compensation components, but it is most easily explained with base salary where tier 1 markets have a cap at $160K and tier 2 markets have a cap at $185K.

Amazon moves fast: Out of all the big tech companies, Amazon moves the most quickly through the negotiation stages outlined in the previous section. This can be both a blessing and a curse. If you have unfinished interviews, we recommend letting those companies know that Amazon is extending you an offer as soon you hear from Amazon (these other companies will know to accelerate their interview timelines). Another tactic is to break up the Amazon negotiation into multiple steps (offer call, counter offer call, final discussion, etc.) and stagger those over the course of a few weeks, if you need to buy yourself more time.

Hiring managers negotiate: This isn't always the case, but it is certainly more frequent at Amazon that the recruiter will bring the hiring manager into the negotiation. While this can sound scary at first (negotiating with your future boss!), we've actually seen it work in the candidates favor in many situations because you no longer need to relay messages through a third-party (the recruiter) and can build rapport with the decision maker.

Amazon has poor benefits: this is true for vacation, 401K, and many other benefits. It is worth asking about these and highlighting the gap vs. other companies, especially if you have a competing offer. For example, Amazon only offers 2 weeks of vacation (even for senior roles). That said, it is nearly impossible to negotiate a change in benefits into your contract. The reason to bring this up is as leverage to increase your total compensation. Also, it's worth noting that a senior level many managers will informally allow their reports to take more than 2 weeks of vacation.

Ask for specific yearly compensation: in order to avoid scenarios where your yearly compensation decreases specifically in year 3 and 4 (which is very common at Amazon), we recommend telling the recruiter you are targeting $350K in yearly compensation and that in order to compare apples-to-apples you can't factor in stock appreciation when comparing between other offers.

Amazon will go above band: this is still rare, but more frequent than at any other tech companies. To be clear, going above band means the company gets VP approval to give an offer that is above the stipulated range for the role/level/geography. This means that it is certainly worth your while to negotiate at Amazon because the delta can be huge between initial and final offer.

Want to learn more from expert negotiators who have negotiated dozens of Amazon offers?

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