Amazon salary negotiation is unique because they use a one-of-a-kind structure for their compensation packages, and they are very focused on both attracting and retaining top talent for a long time.
The key question to ask about an Amazon job offer is “How much can this offer be improved through negotiation?” In my experience coaching software developers through Amazon salary negotiations, the answer varies from “somewhat” to “a whole lot”.
The trick is that you have to be willing to consider non-salary options and think deeply about how long you actually want to work at Amazon because their job offers are structured to increase in value over time, specifically after your second year as an employee.
The bottom line is that if you have a job offer from Amazon in a technical role, you likely have room to negotiate, and may have significant opportunities to increase your pay over the next several years if you’re willing to be a little creative.
What a typical Amazon job offer package looks like
Once you actually get through the Amazon interview gauntlet, you may receive a job offer. Let’s look at an example to see what you can expect.
Amazon’s offers are unique, but have three standard components:
They will often roll all these numbers together to describe the offer in terms of “Total Compensation” by year, but that can be tricky to understand thanks to some quirks I’ll describe below.
Here’s an example taken from a modified version of a real Amazon job offer from one of my clients:
* Equity (RSUs) Value is computed using a round number of $2,000 per share to make things easy
Notice that the Total is pretty consistent through the first four years, but the sign-on bonus and equity components vary pretty dramatically from year to year.
This is what I was referring to above when I mentioned they incentivize you to stay for a few years. The vast majority of the equity is paid out in years three and four, so there’s a pretty big incentive to stick around.
Let’s look a little closer at the main components of an Amazon job offer.
As with most job offers, this is the stable, predictable component that you can use to pay your mortgage or car payment. You can’t know what company performance might look like in the future, so it’s hard to estimate how much of a bonus you’ll get or what your RSUs will be worth when they vest.
The base salary cap
The most unique thing about Amazon job offers is that they typically cap base salary at somewhere around $165–175k depending on division and geographic location.
If you run into the base salary cap, they’ll start adding equity and sign-on bonuses to improve the offer. More senior roles can command very large sign-on bonuses and RSU grants while offering a relatively modest base salary (when compared to some other big tech firms).
How flexible is Amazon on Base Salary?
As long as you’re under the base salary cap, they can be pretty flexible. They don’t typically make large moves on base salary, but they will improve the base salary up to a point.
Sign-on bonuses, like equity, can range from a nice little amount into six figures.
I like to think of the Sign-on bonus as a way to help bridge the gap between your first paycheck and your first RSU vesting date, and Amazon does this more or less explicitly to help compensate for the steep vesting schedule they use for equity (RSUs) (see below).
The Year 1 sign-on bonus is typically larger than Year 2’s, partially as an incentive for you to join, and partially because their steep new-hire equity vesting schedule means your total pay in Year 1 would be pretty low without some sort of sign-on bonus.
In Year 2, the sign-on bonus is smaller, but more of your equity will vest.
How flexible is Amazon on Sign-on Bonus?
Pretty flexible! And that’s especially true once you cross the base salary cap since they will begin adding a lot more equity. More equity means a bigger shortfall in Years 1 and 2, which means they offer larger sign-on bonuses to help bridge that gap.
Do you have to pay back your sign-on bonus if you leave before the end of Year 2?
Sometimes, Amazon will pay your Year 1 sign-on bonus out with your first paycheck in a lump sum. In that case, you’ll almost certainly have to pay back some or all of it if you leave before the end of your first year.
Sometimes, Amazon will pay out your sign-on bonus monthly, and you may not need to pay it back if you leave early (since you were only paid a prorated amount based on how long you were there).
It seems like the Year 2 sign-on bonus is often paid out monthly.
As far as I can tell, there’s not a lot of consistency here and it seems like Amazon may pay sign-on bonuses out differently for more-tenured positions than for less-tenured positions.
Bottom line: Ask your recruiter what strings are attached to your sign-on bonus so you don’t encounter any nasty surprises if you leave before the end of Year 2.
The Equity component of an Amazon job offer can range from “not very much” (as with the example above) to “wowzers, that’s a lot of equity!” depending on the role and whether you bump into the base salary cap.
Amazon is unique because they almost have to offer significant equity grants to compensate for the base salary cap, and your negotiation may end up focused entirely on equity and sign-on bonus.
Amazon’s unique equity vesting schedule
Let’s pause for a moment to talk about Amazon’s unique equity vesting schedule. It’s easiest if we start by looking at a typical equity vesting schedule, then we’ll loop back to Amazon.
How most companies handle equity vesting
Equity is often paid out in equal installments over four years, beginning at the beginning of the second year. So if you got 100 shares of company stock (RSUs, typically) as your equity component at a typical public company, here’s what their vesting schedule might look like:
- Year 1: 25%
- Year 2: 25%
- Year 3: 25%
- Year 4: 25%
There’s typically a one-year cliff, which means nothing is paid out until you’ve been there for a year, then there are regular payouts after that.
In our example above, that might look like this:
- Beginning of Year 2 | 25% payout for Year 1: 25 shares
- Years 2 through 4 | Monthly payouts: About 2.08 shares per month
Sometimes those payments will be quarterly or semi-annually. But the basic idea is that once you’ve been there for a year, you start getting equity payouts at regular intervals. Pretty straightforward!
How Amazon handles equity vesting
Amazon is different.
Here’s their vesting schedule:
- Year 1: 5%
- Year 2: 15%
- Year 3: 40%
- Year 4: 40%
And Years 1 and 2 are each a cliff, followed by semi-annual payouts in Years 3 and 4. So the same 100 shares at Amazon would be paid out like this:
- Beginning of Year 2 | 5% payout for Year 1: 5 shares
- Beginning of Year 3 | 15% payout for Year 2: 15 shares
- Beginning of Month 7 in Year 3 | 20% payout: 20 shares
- Beginning of Year 4 | 20% payout: 20 shares
- Beginning of Month 7 in Year 4 | 20% payout: 20 shares
- Beginning of Year 5 | 20% payout: 20 shares
The optimistic reading on this is that it’s a way to incentivize good employees to stick around longer so they get the bulk of their equity payouts.
The cynical reading of this is that it gives Amazon time to churn poorly-performing employees out of the company before they vest the bulk of their equity.
If you want a better look at what it’s like negotiating an Amazon job offer, including how they use sign-on bonuses to take the sting out of that steep vesting schedule, take a look at my new guide!
Number of shares versus current value of shares
One interesting thing about Amazon’s offers is they typically include a number of shares (like “50” in the example above) as opposed to a computed current value (like “$100k” in the example above).
This is the more accurate way to talk about RSUs, but it’s not what most of the other big tech firms do. This way, you have to do more math to figure out the current value of the shares, and you’ll end up discussing a number of shares rather than a dollar amount most of the time.
How flexible is Amazon on Equity (RSUs)?
Moderately flexible to extremely flexible depending on how close you are to the base salary cap.
Like the other big tech firms, Amazon sees equity as a very big carrot to intice top talent to join their team and stick around, so they tend to be pretty flexible on equity.
How to approach your Amazon salary negotiation
The salary negotiation with Amazon will begin earlier than you might expect.
Before you get a job offer
Your Amazon recruiter will often ask for your salary history, or at least your current salary if it’s legal where they are. Do not tell them your current salary.
They will also usually ask for your salary expectations. That request will sound something like this:
So what were you hoping for in terms of compensation if you come aboard here at Amazon?
Do not tell them your salary expectations because you will essentially be guessing what they might pay someone with your skillset and experience to do the job they need done.
While they might have a good idea of the value of that job to Amazon’s business, you would only be guessing. You will practically always guess wrong and cost yourself money later on. So just don’t guess.
Also, because Amazon’s equity vesting schedule is so unusual, and because they include different-sized Year 1 and Year 2 sign-on bonuses, it can be very difficult to even describe a “salary number” in those terms.
You’re much better off seeing what they offer, spending some time with it to understand what your actual pay will look like over the next few years, and negotiating from there.
Once you receive your job offer from Amazon
The first thing you should do is look to see if you’re at or near the base salary cap. It’s important to know up front if you can expect a move on base salary or if you’re really just going to negotiate equity and sign-on bonus.
That doesn’t mean you won’t counter on base salary, but it helps to know whether you can expect any movement there so you’re not disappointed if they aren’t flexible on base salary.
Once you counter on base salary, they will often adjust the job offer in multiple dimensions, so it’s important to do the math to figure out what your annual compensation will be if they adjust base salary, sign-on bonus and/or equity.
Be sure that if you ask for and receive more equity that you also try to improve your sign-on bonus to bridge the Year 1 and Year 2 gaps while you wait on the heavy vesting in Years 3 and 4.
What to look out for when negotiating an Amazon job offer package
- Amazon caps base salary for most jobs at around $165–175k, so make sure to see whether you’re near the cap before you negotiate.
- Amazon has a very unique equity vesting schedule that ramps significantly in Years 3 and 4.
- Amazon frequently offers two sign-on bonuses—Year 1 and Year 2—to help bridge the gap during the slow part of the equity vesting ramp.
- Do the math for each year’s compensation based on their offer so you can see how your pay will change as sign-on bonuses are paid out and equity vesting ramps up later on.