
Amazon's 401(k) Plan Is Pretty Brutal, Too - m_haggar
http://www.bloomberg.com/news/articles/2015-08-24/amazon-s-401-k-plan-is-pretty-brutal-too-idpw28hz
======
delecti
This article is technically right but practically speaking incorrect. You are
100% vested after 3 calendar years in which you have worked more than (I
believe) 1000 hours.

This means that if you start before about half-way through the year, you will
have worked more than 1000 hours that year, then the next year, and will have
reached 1000 hours approximately halfway through your third calendar year
there.

The end result is that practically speaking, a full-time employee will be 100%
vested after no more than about 2.5 years, and possibly as soon as 2 years.

Source: Am an Amazon employee and I've got 401k contribution confirmations
wherein my "vested employee match" went from 0% to 100% after working there
just over 2 years, having started in mid 2012.

~~~
cameldrv
Better check your math. Assuming you work 2000 hours per year, if you start in
June, you vest after 2.5 years. If you start in July, you vest after 3.5
years. 3 years would be the average, and 2 years would be impossible.

~~~
delecti
I started in July 2012, and I worked at least 1000 hours before the end of
2012, so that counted as a calendar year in which i worked at least 1000
hours. I easily hit 1000 hours in 2013, having worked there the entire year. I
hit 1000 hours approximately halfway through 2014, becoming 100% vested after
about 2 years of employment.

Maybe my original post was misleading, if you can tell me what you
misunderstood then I can edit it to clarify. Regardless, I assure you that I
was 100% vested in mid 2014, after roughly 2 full years of employment spanning
3 calendar years.

~~~
what_ever
Do you have to wait till the end of the 3rd calendar year? Or is it counted as
soon as you complete 1000 hours in the 3rd year?

~~~
delecti
As soon as the 1000 hours is complete. Or at least by the time I got my next
401k contribution confirmation.

------
LordKano
A couple of years ago, I went to an Amazon tech social gathering and rubbed
elbows with some of their people.

I wasn't looking for a job, the gathering was 5 minutes from where I work and
I knew there would be free food. They were looking for people to relocate to
other parts of the country. A lot of H1B people showed up at this event. Since
they didn't have any ties to this area, they were a lot more receptive to the
idea of moving to the West coast.

I went, ate their food, drank their beer and won the door prize. They asked me
if I'd be interested in interviewing, I graciously declined and the more I
hear about working there, the happier I am that I declined their interview.

~~~
moron4hire
I got cold-called through LinkedIn by one of their recruiters. Out of
curiosity, I went through with the interview process. I had a number in mind
that, if they could match or exceed, would have been worth giving up on all of
my current plans and changing coasts. I passed and got an offer, but it wasn't
going to be enough to warrant my wife leaving her job and us moving out of the
DC suburbs into Seattle. Plus, the benefits package was super confusing, and I
generally believe that confusion in paperwork is deliberate obfuscation. So
that was a red flag. There was also a lot of stock, which seemed like a really
chincy form of "compensation" considering how old the company is now.

There was zero interest on their part to consider taking me as a contractor,
taking me as 100% remote, or even taking me in their office in Herndon, VA,
which is accessible by train for me (oh yeah, after my car finally broke down
after 380k miles, I elected to not replace it, so my wife is the only one with
a car right now). I've been _leading_ completely disconnected teams on _rather
successful_ projects for years now. I see a lack of willingness to do remote
work as a sign that the institution knows they suck at project management. Who
wants to work for a company that can't manage projects correctly?

I'm sticking to consulting while using my ample sparetime to build and market
product offerings. You will pay a premium for the illusion of stability that
working for a megacorp provides. It doesn't cost anywhere near a marginal
$100k a year to give me office space and manage benefits. I mean, at that
premium, I could hire myself a fulltime secretary and have him or her do a ton
of other things for me. Don't get lured into thinking that Amazon or IBM or
whomever won't lay you off the second it works better for their shareholders.
At least as a consultant I have a contract.

~~~
presty
> There was also a lot of stock, which seemed like a really chincy form of
> "compensation" considering how old the company is now.

er.. how is it a really chincy form of compensation, considering how well
amazon's stock has performed?

~~~
jsolson
So, I would have agreed with this before I worked there. It's stock, it's done
well, great for you as an employee!

Amazon has what they call a 'total compensation philosophy'. Basically, if the
stock has done really well in the past year, your salary increase and stock
bonus in your next annual review will be adjusted accordingly. If you've done
really well and they'd strongly regret you leaving, you can negotiate on this,
but only if you've got leverage. After my first full year there they offered
me a 2.3% salary increase, zero additional stock[0], and when I pushed back
said 'look how well the stock has done! you're going to make way more this
year than you had expected'.

I politely informed them that they seemed to be trying to feed me a pile of
bullshit, that bullshit wasn't part of my approved diet, and that if they
continued trying to do so, this would be my last week with Amazon. My next
meeting (a few days later) included a considerably better compensation
adjustment.

[0]: This was in part due to confusion on who qualified for equity. I'd
started January 3rd of the preceding year. They believed only people employed
prior to Jan 1st qualified. I had brought my offer letter to the meeting,
after having been warned to be prepared for these sorts of shenanigans, which
clearly said that because I'd started prior to Jan 15th, I was absolutely
eligible. That would be the end of the story, except they then tried the line
"Well, not everyone receives an equity refresh every year". I had exceeded
expectations and hit the top leadership bucket. If that didn't qualify for
equity, I wasn't really interested in continuing with Amazon.

The irony: the equity grant I eventually received didn't start vesting until
~18 months after that meeting. I quit ~13 months later.

~~~
moron4hire
Ugh, these sorts of "shenanigans" are the main reason I'm sticking to
consulting. I just can't handle being nickle-and-dimed at every turn anymore.

It's my compensation for my employment with you, it shouldn't be a game of D&D
with a belligerent DM.

------
AdmiralAsshat
_Amazon workers who join full time must stay for three years before they vest
in the company match. Leave after two years and 11 months? You 're out of
luck._

While Amazon's policy does seem incredibly limited, this particular jab makes
no sense. Three years is the point at which you can _begin_ contributing. So
if your hypothetical worker survived that extra month and made it to three
years instead of 2 years 11 months, he'd only get an employer contribution
match on one month's paycheck.

~~~
jayess
This sort of vesting schedule is pretty common. I'm not sure busting Amazon's
balls on this one is very genuine.

~~~
icefox
> The match of employee contributions into their 401(k) plans is below average
> and made entirely in Amazon stock, which leaves employees dangerously
> exposed to the company's fortunes.

How about this other aspect of their 401k plan? I have never worked at a
company that does that. Being so closely tied to your place of work
financially is usually not recommended.

~~~
bpodgursky
My employer matches in company stock too. It's not a big deal, you can
exchange it immediately for a portfolio if you want via the 401k management
portal (T Rowe Price for me). It's probably just politically easier for the
board to issue more shares than to spend cash.

~~~
s73v3r
But now you've got the added tax implications of having to sell stock right
when you get it.

~~~
pbhinder
It's not the tax that is the problem but the risk that an employee is taking
with single company stock in their retirement portfolio.

------
xienze
> If Amazon matched employee retirement contributions in cash, a new employee
> earning $80,000 a year would get a maximum company contribution of $1,600.

Wow, and I thought IBM was stingy. They at least matched 100% up to 6% (of
course, you forfeit all that if you aren't employed on December 15th of that
year).

~~~
dpark
> _They at least matched 100% up to 6% (of course, you forfeit all that if you
> aren 't employed on December 15th of that year)._

That seems like a really shortsighted policy. I expect that would seriously
encourage people to leave in January. Having big blocks of people leave all at
once seems far worse than having turnover spread more evenly.

~~~
xienze
IBM is all about short-sighted policies. But yes, people did their best to
leave early in the year.

------
guelo
I've worked at a bunch of SF tech companies, from small to big, and they all
had shitty 401k plans with little or no matching. More common now are big end
of year bonuses in cash or RSUs.

~~~
thearn4
The 5% matching contributions for the Thrift Savings Plan (gov't 401k
equivalent) is one nice part about being in the fed. Not sure if it balances
out the crappy GS payscale (especially for colleagues of mine in high-cost
areas like SF Bay), but it's something.

~~~
TheBeardKing
Also the TSP fees are much lower than even Vanguard.

------
pm24601
The 401k is a _feature_ not a bug.

Amazon managers abusing the workers in the warehouse is a _feature_ not a bug.

Women not being promoted within Amazon is a _feature_ not a bug.

For Jeff Bezos to claim he didn't know about this is a _feature_ not a bug.

At this point, anyone who thinks that this behavior was all a big mistake
really is in denial, or intentionally ignorant (looking at you, Jeff)

Update: Ah, the hate downvotes: I wonder exactly why people wish to downvote?

* Is it because they don't want to believe that Amazon is behaving badly?

* Is it because they think that I am some sort of Amazon hater and they want to punish me?

* Am I inaccurate in some way?

Full disclosure: I am buying Amazon stock, because any company that is this
tight with the dollar is figuring out how to extract blood from a turnip. I
also use Amazon AWS all the time.

But if you downvote: do the favor and add a comment, and attack me. Personally
if you like. Get a little ad hominem rage venting. I don't mind. Just own the
downvote.

------
autobahn
Can someone tell me, what's the actual BENEFIT to working at Amazon? Do people
really go there simply because of the name? It doesn't seem like there's any
reason for talent to go there as opposed to somewhere else?

~~~
umanwizard
From personal experience -- if FB and Google are the big leagues, Amazon is
triple-A ball[1]. The caliber of people there is quite high, but it's still
easier to get in than at the truly elite places. I don't think there are a lot
of people with offers from Google working at Amazon, but Amazon can be a good
stepping stone.

[1]: (Non-Americans, substitute something like "Premier League" and "whatever
league the Premier League relegates to")

~~~
nostrebored
I actually know a number of people working for Amazon that had comparable
offers from Google and decided to work for Amazon. Admittedly, many of these
people made the decision for moral reasons, specifically regarding how Google
handles user data.

But as with most of Amazon, I guess a lot of it has to do with the team that
you're in.

~~~
umanwizard
That's interesting. I was under the impression there would be practically
none. But I guess I hadn't considered the moral angle.

------
spacecowboy_lon
Man that sucks a good big company DC plan in the uk matches at 5% from day one
- a really good one up to 8-10%.

I am surprised that post Enron that any match in company stock is allowed.

------
sjg007
Some places don't even match 401k...

~~~
jsolson
Amazon's argument, when I was working there from ~2011-2013, was that they had
few perks, hard work, but that they paid better than other companies giving
employees more freedom to choose what to do with the fruits of their labors.

I don't care for that argument generally (as I personally value my free time
well beyond what anyone is willing to compensate me for it -- call it personal
utility if you like), but even so, the argument only works if it's actually
true. In my experience it is not; Amazon's compensation lags other "Big 5"
companies considerably, but some of that lag is hidden in things like their
401k match policy and the delayed stock vesting.

------
pc86
It's definitely the worst on this list but my company's is even worse (scored
sub-20 on the same survey but not a publicly traded company):

\- Must be an employee for 1 calendar year before you can enroll. Only two
open enrollment periods so potentially up to 18 months from hire before you
can contribute. \- 50% match on first 2% \- Match is not distributed until end
of Q2 the following calendar year. So this year's match will not hit my
account until Jul/Aug 2016. This also has the nice secondary effect of making
every September hell because nobody quits between January and August. \- 100%
vesting after 3 years, no vesting prior \- Surprisingly, a nice selection of
low-fee funds including Vanguard

If the pay here wasn't 30% above market for the area the 401(k) alone would
have forced me to decline the offer.

~~~
jessaustin
A non-public company that is so much nicer to more senior people might be one
that takes care of execs and high-level managers, and doesn't care about
lower-levels for which turnover is high? That is, the 401(k) is designed not
to be useful for most of the people working there.

------
edgyswingset
Can an Amazon employee confirm this?

The chart Bloomberg has shows the old 401k plan for Microsoft. The new one
would put it near the top instead of near the bottom.

~~~
mabbo
At the Canadian office, I get 3% match in RRSPs from day 1, and not (afaik) in
Amazon stock. I think after a few years, it goes to 4%. Not sure if they'll
claw any of it back if I leave. Probably.

------
merpnderp
That's brutal. My place of work started matching after 90 days (after the
introductory probation period), and I was immediately vested.

~~~
jobu
Is the delayed vesting for 401k a common thing? All the companies I've worked
for either had no match, or the match was immediately vested.

~~~
merpnderp
I've only worked for one place that didn't immediately vest (after a 90 day
period) and that was a long time ago and the CEO is currently rotting in jail.

------
breischl
Oh my gawd, a 2% match? Doesn't that violate some UN human rights convention?!
</s>

It's reasonable to compare their comp package to their competitors, especially
if you're considering working there. But calling the tax-advantaged retirement
plan that gives you free money "brutal" is just whinging.

~~~
eternalban
Love to know the actual reason for this coordinated attack on Amazon. What's
about Seattle based software companies and irritated established interests?
/(a big) wink

~~~
philiphodgen
One reason for the attacks on Amazon: they are coming from the New York Times.

Jeff Bezos owns the Washington Post -- a significant competitor to the NYT.

The NYT is in the happy position of damaging a competitor while generating
clicks.

It's personal, in other words.

~~~
aioprisan
That's a copout. Just because Bezos buys one large newspaper now means that
any other newspaper presenting a well-documented expose of the company with
hundreds of their own employees talking about systemic issues is invalid?

------
jaworrom
Why anyone would invest in a 401k now is beyond me.

~~~
parsnips
I would think nowish would be the time to get money into equities.

~~~
toephu2
what do you think a 401k does behind the scenes?

~~~
parsnips
Depends. I have a money market option in my 401k account, for example.

~~~
calbear81
You should probably not put too much in that money market option (maybe as a
rainy day fund).

