Amazon’s announcement this week that it will raise its minimum wage for workers in the United States and United Kingdom earned it a wave of positive publicity, but backlash is already growing as reports emerge that its new pay structure will do away with monthly bonuses and stock option awards. In blog posts about the wage increase (slightly different ones were posted on its U.S. and U.K. sites), Amazon said it would replace its restricted stock unit [RSU] program with a direct stock purchase plan before the end of next year, and that the net effect of its changes would be “significantly more total compensation for employees,” but did not mention monthly bonuses.
According to Amazon employees who spoke to Yahoo News, however, monthly bonuses will end on November 1. Some workers who have been with the company for more than two years were already earning nearly $15 before the raise, but the publication reports that these workers “could lose thousands of dollars that they would have collected from the stock and monthly-bonus programs,” which include one called Variable Compensation Pay (VCP). Under VCP, workers who hit certain goals could earn up to 8% of their monthly income, with an average employee earning about $1,800 to $3,000 a year in bonuses, according to one of Yahoo News’ sources.
The pay structure change will also hurt many employees in the UK, the GMB, a major trade union, told the Guardian. The GMB says Amazon’s changes to its stock option and bonus programs could cost thousands of workers £1,500 in one year, amounting to “a stealth tax on its own wage increase.”
Amazon is increasing its minimum hourly wage in the U.S. from $7.25 to $15 an hour. In the UK, the minimum wage will increase from £8.30 to £10.50 for workers in London and from £8 to £9.50 outside of the capital. In its announcement on October 2, Amazon said “the net effect of this change and the new higher cash compensation is significantly more total compensation for employees, without any vesting requirements, and with more predictability.” Before the wage increase, Amazon faced mounting criticism after workers complained of poor labor conditions at its warehouses and low wages.
The Guardian reports that warehouse workers in the UK now receive one share of Amazon stock, currently worth about $1,953 (or £1,509), at the end of every year, along with one additional share every five years. According to the GMB, they can cash in those shares tax-free after holding onto them for two years. Therefore, the payout they would lose would be worth about half the £3,120 pay increase expected by the average Amazon warehouse worker outside of London, who earn about £17,000 a year, the union said. Furthermore, the GMB claimed workers will no longer get cash bonuses for meeting targets during the Christmas shopping period, but Amazon told the Guardian that no such bonus program exists.
TechCrunch has contacted Amazon for more information. In email sent to Yahoo News, CNBC and other media, an Amazon spokesperson said “The significant increase in hourly cash wages more than compensates for the phase out of incentive pay and RSUs. 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.”