How to Negotiate a Job Offer from Amazon

How to Negotiate a Job Offer from AmazonHow to Negotiate a Job Offer from Amazon 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 sev eral years if youre willing to be a little creative.Once you actually get through the Amazon interview gauntlet, you may receive a job offer. Lets look at an example to binnensee what you can expect.Amazons offers are unique, but have three standard componentsThey 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 Ill describe below.Heres 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 easyNotice 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 welches 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 theres a pretty big incentive to stick around.Lets look a little closer at the main components of an Amazon job offer.As with fruchtwein job offers, this is the stable, predictable component that you can use to pay your mortgage or car payment. You cant know what company performance might look like in the future, so its hard to estimate how much of a bonus youll get or what your RSUs will be worth when they vest.Amazon tends to pay competitive cousine salaries up to a point (see below). If youre wondering whether the salary youre offered is competitive, paysa.com is a good place to start.The most unique thing about Amazon job offers is that they typically cap base salary at somewhere around $165175k depending on division and geographic location.If you run into the base salary cap, theyll 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 te ch firms).How flexible is Amazon on Base Salary?As long as youre under the base salary cap, they can be pretty flexible. They dont 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 mora 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 2s, 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 thats especially true once you cro ss 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, youll 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, theres 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 dont 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, thats 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.Amazons unique equity vesting scheduleLets pause for a moment to talk about Amazons unique equity vesting schedule. Its easiest if we start by looking at a typical equity vesting schedule, then well loop back to Amazon.How most companies handle equity vestingEquity 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, heres what their vesti ng schedule might look likeTheres typically a one-year cliff, which means nothing is paid out until youve been there for a year, then there are regular payouts after that.In our example above, that might look like thisSometimes those payments will be quarterly or semi-annually. But the basic idea is that once youve been there for a year, you start getting equity payouts at regular intervals. Pretty straightforwardAnd 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 thisThe optimistic reading on this is that its 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 its 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 guideNumber of shares versus current value of sharesOne interesting thing about Amazons 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 its 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 youll 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.The salary negotiation with Amazon will begin earlier than you might expect.Your Amazon recruiter will o ften ask for your salary history, or at least your current salary if its 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 thisSo 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 Amazons business, you would only be guessing. You will practically always guess wrong and cost yourself money later on. So just dont guess.Also, because Amazons 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.Youre much better off seeing what they offer, spending some time with it to understand what y our actual pay will look like over the next few years, and negotiating from there.Once you receive your job offer from AmazonThe first thing you should do is look to see if youre at or near the base salary cap. Its important to know up front if you can expect a move on base salary or if youre really just going to negotiate equity and sign-on bonus.That doesnt mean you wont counter on base salary, but it helps to know whether you can expect any movement there so youre not disappointed if they arent flexible on base salary.Once you counter on base salary, they will often adjust the job offer in multiple dimensions, so its 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 koranvers 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.This article was originally published o n Fearless Salary Negotiation . Reprinted with permission.