Let's say you're applying for a position where usual FAANG TC is 300k.
Then Amazon recruiter wants to "match" that, so 300 * 4=1200k over 4 years.
Base pay is maxed at 160 (until today's announcement), so
1200k-(160 * 4) = 560k to come up with with stocks and cash bonus.
Let's say Amazon 30 day moving average share price during negotiation is $1200 a share
So now recruiter must make math such that:
- TC stays relatively flat. On year 3 & 4 you get 40% of award, but only 5% year 1 and 15% year. (so a cash bonus to offset year 1 is ~35% of grant amount, and cash bonus offset year 2 is ~25% of grant amount)
- TC assuming 15% growth of stock
So, they'll offer you 220 units:
Year 1:
with only 5% * 220 * 1200=$13k from RSU, you need (300-160-13)=127k cash bonus , now your TC year 1 is 300k.
Year 2:
15% * 220 * 1200 * 1.15=46k from RSU
So cash bonus of 94k.
So all the math here is done using fictional share price that grew 1.15^n for each year. But in concrete, your offer says 220 units. If Amazon grew much more than 15% a year, on year 3 you're still making 40% * 220 units, no matter what the share price is.
But the final offer is:
160k / year base, 220 units over 4 year with 5%/15%/40%/40% vesting, and 127k cash bonus year 1 + 94k cash bonus year 2.
Amazon is one of rare FAANG where the RSU offer is given in share count in offer itself, not in $.
I went back to look at the AWS offer I turned down. There was no mention of a 15% assumption anywhere, but it did spell out total RSU, base salary, and first two year bonuses, which ends up making year 1 about 8% more than year 4 for the same stock price.
In my case they built in a back loaded effective salary increase rather than being perfectly flat. Cost of living perhaps?
E.g. your example becomes TC (285, 292, 305, 318) or something similar.
Then Amazon recruiter wants to "match" that, so 300 * 4=1200k over 4 years.
Base pay is maxed at 160 (until today's announcement), so 1200k-(160 * 4) = 560k to come up with with stocks and cash bonus.
Let's say Amazon 30 day moving average share price during negotiation is $1200 a share
So now recruiter must make math such that:
- TC stays relatively flat. On year 3 & 4 you get 40% of award, but only 5% year 1 and 15% year. (so a cash bonus to offset year 1 is ~35% of grant amount, and cash bonus offset year 2 is ~25% of grant amount)
- TC assuming 15% growth of stock
So, they'll offer you 220 units:
Year 1:
with only 5% * 220 * 1200=$13k from RSU, you need (300-160-13)=127k cash bonus , now your TC year 1 is 300k.
Year 2:
15% * 220 * 1200 * 1.15=46k from RSU So cash bonus of 94k.
Year 3:
40% * 220 * 1200 * 1.15^2=140k RSU that's 300k of TC
Year 4:
40% * 220 * 1200 * 1.15^3=160k RSU That's even more, 320k TC \o/
So all the math here is done using fictional share price that grew 1.15^n for each year. But in concrete, your offer says 220 units. If Amazon grew much more than 15% a year, on year 3 you're still making 40% * 220 units, no matter what the share price is.
But the final offer is:
160k / year base, 220 units over 4 year with 5%/15%/40%/40% vesting, and 127k cash bonus year 1 + 94k cash bonus year 2.
Amazon is one of rare FAANG where the RSU offer is given in share count in offer itself, not in $.