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Amazon's 2024 RSU Policy: A Guide for Eligible Employees

Introduction

Amazon, one of the tech giants of our era, offers its employees a unique compensation benefit known as Restricted Stock Units (RSUs). These RSUs are a valuable addition to an employee’s overall compensation package and can significantly contribute to their long-term financial well-being. In this comprehensive guide, we will delve into every aspect of Amazon RSUs, from eligibility and grant details to vesting schedules and tax considerations.

Happy Amazon Executives with vested RSU

Eligibility

As of 2022, the good news is that the majority of Amazon employees are eligible for RSUs. However, there are a few exceptions to keep in mind. If you work fewer than 30 hours per week, you may not qualify for these stock grants. Additionally, employees at certain job levels may not receive RSUs. Assuming you don’t fall into either of these categories, you can expect to benefit from Amazon’s RSU program.


Understanding Your RSU Grant

The number of RSUs you receive at Amazon is not a fixed amount for all employees. Instead, your RSU grant is determined based on your target compensation level, which varies depending on your role and job level. This approach aligns Amazon employees’ interests with the company’s success by giving them a stake in the business.


Upon joining Amazon, you will receive an RSU Award Summary, which outlines the details of your grant. It’s important to note that Amazon employees often receive additional RSU grants during their annual review and compensation adjustment, typically in the first quarter of each year. However, new employees usually won’t receive additional shares at their first review.


The Unique Amazon RSU Vesting Schedule

Amazon’s RSU vesting schedule sets it apart from many other companies. Instead of the typical 25% vesting each year over four years, Amazon’s on-hire RSU vesting schedule is as follows:

Year 1: 5% of the initial grant vests at the end of your first year.

Year 2: 15% of the grant vests at the end of your second year.

Year 3: 20% of the grant vests at the six-month point of your third year, with another 20% vesting at the 12-month mark, totaling 40%.

Year 4: The vesting schedule for the fourth-year mirrors that of the third.

To illustrate this schedule, let’s consider an example. Suppose you’ve been granted $500,000 in Amazon RSUs, equivalent to 4,000 shares based on a $125 per share stock price at the grant date. Assuming a constant stock price over the four-year grant period and ignoring taxes, your vesting would look like this:

Year 1: $25,000 vests after one year.

Year 2: $75,000 vests at your second anniversary.

Year 3: $100,000 vests (20% at six months and 20% at 12 months).

Year 4: Another $100,000 vests following the Year 3 schedule.

 

 The New RSU Choice

Now, let’s dive into the exciting update for eligible Amazonians in 2024. If you are an employee at L4 to L8 and have 16 or more RSUs vesting in 2025, you have a choice:

Convert 25% of your RSUs into cash: Amazon has set a predetermined planning price of $173.12 per share. This cash will be paid quarterly beginning in May 2025.


Receive the remaining 75% RSUs as planned:

These RSUs will vest over the planned vesting period of May, August, November, and February 2026.


For those who prefer to continue with the traditional path, no action is needed; you will receive 100% of your RSUs as planned.

Enrollment Period

The enrollment period for this choice is between May 3rd and May 17th, 2024. Make sure to review your options and make an informed decision during this window.

Remember, RSUs are a valuable part of your compensation, and understanding the details can help you maximize their benefits. Seek professional guidance if needed and make the most of your Amazon RSUs!

Disclaimer:


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