Update (September 2022): Although Amazon gives a lot of autonomy to recruiters for compensation, our negotiation coaches have noticed a trend with HR teams being more involved for salary requests out of band. Something to consider when you’re negotiating is picking a realistic number. Want help with that? Check out our negotiation coaching here to get help from some of experts who have been dealing with this recently.
If you're courting the top technology companies for job opportunities, Amazon is a prime candidate worthy of your attention. Amazon's unique compensation strategy distinguishes them from the other members of FAANG, and may require additional thought and consideration as you compare their offer to its other tech counterparts. If you're open to creative solutions to increase your overall compensation, you may find an offer from Amazon a tantalizing option.
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Levels
Let's begin with the foundation for your Amazon offer: Level. All corporate positions at Amazon have a desired level associated with the role. Level is determined by two factors:
- Years of Experience
- Interview Performance
Amazon measures level according to the following years of experience:
| Level | Years of Experience |
|---|---|
| L4 | 1-3 |
| L5 | 3-10 |
| L6 | 8-10+ |
| L7 | Rare (Amazon usually promotes from within) |
Most corporate positions at Amazon begin at Level 4. If your years of experience fall between the requirements for level 4 and level 5, the Recruiter will likely submit you to be considered at level 5. However, if you don't do well during the first interview, you will likely be down-leveled to level 4. Each level has a unique set of expectations and calibration process. For example, as a L4 Software Engineer, you won't have a System Design round since it's something that comes with experience. In contrast, L5 and above Software Engineers will be expected to do exceptionally well with the System Design round.
Many candidates make the mistake of asking about level too early in the process. It's recommended to wait until the Recruiter invites you to the first round of interviews. Then it's acceptable to ask the Recruiter which level you're being considered for, so you can prepare accordingly.
Level cannot be negotiated at the end of the process. Ideally, level should be discussed before a recorded phone interview. If you think you are being considered at a level below your skill set and experience, advocate for yourself! Be prepared to demonstrate and explain to the Recruiter why you should be considered for a specific level. There's a chance that your recruiter mis-calculates your total years of experience.
When discussing level, consider your experience, and lean on the Recruiter for guidance. While you want to be considered for the appropriate level, you also do not want to be assessed at a rubric well beyond your breadth of experience. Candidates who over-inflate their experience do not usually do well. Still, it's common to be down-leveled and still receive an offer from Amazon. It's very rare for a candidate to be up-leveled. In fact, less than one percent of candidates are up-leveled in the interview process.
Total Compensation
Like the other large tech companies, Amazon takes a total compensation approach as they negotiate with successful candidates. However, the compensation structure and strategy they use to comprise an offer has a few unique elements you should be aware of prior to negotiations with a Recruiter.
Total compensation at Amazon is comprised of three key components:
- Base salary
- Sign-on bonus
- Restricted stock units (RSUs)
Amazon's compensation structure is designed not only to attract top talent, but also to retain top talent. Sign-on bonuses are awarded to entice new talent, and a back-loaded vesting schedule is meant to incentivize employees to stay with the company.
An offer from Amazon may look like this:
| Compensation Type | Amount |
|---|---|
| Base Salary | $140,000 |
| Sign-on Bonus | $50,000 (over two years) |
| Equity (RSUs) | $100,000 (over four years) |
These numbers usually represent compensation over a four year period. Generally, there are differences regarding the dollar amount of the sign on bonus in year one versus year two. Likewise, the equity grant will not vest evenly over the four year timeframe. (We'll discuss these points in greater depth later).
Compensation Bands
Amazon has strict compensation bands Recruiters must work within. Compensation bands provide guidelines for candidate searches, and are meant to keep compensation fair across job roles. Amazon's compensation bands are broken up into tertiles:
Recruiters are instructed to negotiate the best deal for the company, but they also want to win top talent: you. This means they do not always delve out the maximum amount in their initial offer, but are usually open to negotiation. However, if you discussed your compensation requirements with your Recruiter early in the process, they have a good idea of what you will accept and how much to offer. If your initial request fell within the minimum tertile, you guessed it, you're likely going to receive an offer from that salary band. This is a prime example of why it's best to wait and discuss compensation requirements later in the process one you have more information.
Amazon's Salary Cap
Amazon is unique in that they have a salary cap. Recruiters cannot offer a candidate a base salary sum beyond the maximum amount established for a given role and location. Base salaries vary by job function, but rarely exceed $160,000. Exceptions are made for candidates in New York City ($175,000) and San Francisco ($185,000) for L5 and above. (Note that this has since been updated to a cap of $350,000 as of 2022). In contrast, Google and Facebook have Finance teams that have permission to grant offers beyond the recommended salary band for candidates on a case by case basis.
For example, let's say Google offers a strong candidate a total compensation package valued at $200,000 ; and later that week, the same candidate receives a competing offer from Facebook valued at $225,000. Hypothetically, the Google Recruiter could present the information to the Finance team, and ask to have them match Facebook's offer to remain competitive in the market. The Google Finance team is not obligated to match the offer, but depending on the circumstances, they may acquiesce. Recruiters at Amazon do not have that flexibility.
Then the question becomes, what is important to you? Although Amazon may not match a hefty base salary like Facebook, they may be willing to give a generous sign-on bonus. You must weigh your personal priorities, how long you plan to stay at Amazon and determine which compensation structure makes the most sense for your unique situation.
Vesting Schedule
Perhaps the most unique aspect of Amazon's compensation structure is the back-loaded vesting schedule. RSUs vest in a 5 - 15 - 40 - 40 sequence over four years, which means the majority of the equity awarded will not be available to you until your third and fourth year of employment.
For example, if Amazon awards you $100,000 in equity, you would collect:
| YR 1 | YR 2 | YR 3 | YR 4 |
|---|---|---|---|
| $5,000 | $15,000 | $40,000 | $40,000 |
In theory, this structure incentivizes employees to stick with Amazon and rewards loyalty. The low equity percentage is offset by a sign-on bonus for the first two years. However, the average attrition rate at Amazon is two years. The company knows many employees will not stay a full four years, and they save money with this payment methodology.
Sign-on Bonus
Sign-on bonuses can be an attractive aspect of Amazon's compensation. The sign-on bonus is typically paid out over the first two years with the company. Depending on your specific offer, the sign-on bonus may be paid in a lump sum, or prorated and paid out monthly. The bonus for year one is generally greater than the amount paid in year two. This helps off-set the low equity percentage that vests in year one, and serves as an incentive to attract new talent with cold, hard cash. Keep in mind, if you receive a lump sum pay out, you may have to pay a portion of the sum back if you leave the company within the first year. Read the offer letter carefully to know what your obligations will be.
Know Your Worth
Think of the interview and offer negotiation like a card game. You want to play well, but you do not want to reveal your cards too early. Similarly, it's best to wow the Amazon team in interviews (play a great hand) before you make compensation demands (show your cards).
Early in the process, the Recruiter will likely ask you what you expect in terms of compensation. In other words, how much money do you expect to make? Whenever possible, refrain from giving an exact number. It's best to wait until you have a better idea which level you will be assessed for in the interview process before you discuss compensation expectations. Once you know the level, you can use our handy compensation calculator, and the information in this article, to compose a total compensation sum that works well for you.
It's crucial to develop a healthy, workable total compensation sum for yourself. Once you accept an offer from Amazon, your compensation will rarely increase in the first four years unless you receive a promotion or the stock appreciates.
Remember to drive salary negotiation from a total compensation perspective. Compensation is a complex topic and there are many components that you don't have visibility into. As an example, if a company plans to have multiple launches in the next few months, they may predict that stocks will skyrocket. In such a case, they may be wary of giving you more stocks. This is why negotiating with a total compensation number is the most productive and effective. Let the company and recruiter figure out the breakdown of each component so it makes sense for you and also for them. Amazon's stock continues to grow aggressively so you should factor some growth on RSUs. Sign on bonuses are the most flexible component of the compensation equation. Therefore, if the offer is lacking a robust base salary, ask for a sizable sign on bonus to bridge the gap between the offered amount and where you would like to be.
Why Choose Amazon?
Amazon talent usually prioritizes the experience over the money. At Amazon, it's 50% resume and 50% ability. If you want a great opportunity, an open door, or a promising career path, there are ample tools and resources to help you succeed. At Amazon, your resume doesn't define you the way it may at other technology companies. It's not uncommon to begin working in the warehouse and progress to a Global Operations Manager. There are countless career success stories! Amazon has even seen self-taught engineers climb from Intern to Vice President. The opportunities are abundant!
Need additional guidance negotiating a great offer? Check out our new salary negotiation service to help you navigate the process!