Big Tech negotiation
by Josh Doody
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.
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) Vesting
|Equity (RSUs) Value*
* Equity (RSUs) Value is computed using a round number of $100 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.
Amazon offers have a base salary cap somewhere around $320k depending on division and geographic location. This often doesn’t come into play since they raised the cap to allow them to offer more competitive base salaries a while back, but it’s still good to be aware of this limitation.
If you do happen to run into the base salary cap, they’ll start adding equity and sign-on bonuses to improve the offer.
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.
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.
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 most unique component of Amazon’s job offers is their equity component. 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.
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.
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:
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:
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!
Amazon is different.
Here’s their vesting schedule:
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:
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!
One interesting thing about Amazon’s offers is they typically include a number of shares (like “1,000” 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.
When Amazon makes an offer, they’re typically targeting some annual total compensation number over a span of four years. If you do the math, you’ll often notice a drop between Year 2 and Year 3 when you move from 15% RSU vesting to 40% RSU vesting. That drop goes away when you build in an assumption of 10-15% year-over-year stock price growth.
So when Amazon makes you an offer, what they’re really saying is, “Here’s a combination of base salary, sign-on bonuses, and equity that we expect to be worth this amount—your targeted annual total compensation—on average over the next four years, assuming Amazon’s stock price increases by 10-15% a year during that time.”
But of course, stock prices—even for strong legacy companies like Amazon—don’t always go up. So what happens when the stock price take a big hit?
Since the equity they are offering is meant to help achieve a target annual total compensation, they might adjust your total number of unvested RSUs through a special stock grant.
So if you were expecting a certain value for your vested RSUs one year, but the market dipped and you didn’t actually get the kind of value anticipated with that vest, then Amazom might recalibrate by giving you additional RSUs that will vest in the future over some time period to help close that gap.
The downside to this is that you obviously would make less than expected for the affected year. The upside is that their internal compensation algorithm will try to make you whole in future years and if the market rebounds and has a spike in stock price, you still get to vest all of the additional RSUs they granted.
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 entice 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 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.
Learn more For a deep dive on how to avoid sharing your current or expected salary when asked, see this guide:
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.
Learn more More salary negotiation strategy and tactics...
I offer full-service 1-on-1 support to help Senior Software Engineers and Engineering Managers negotiate the best offer possible and with more confidence and less stress.
Here are examples of results I've helped others achieve in their negotiations with Amazon.
Working with Josh was amazing and I have already recommended him to several other engineers. Having someone who knows how these companies operate and what normal looks like in a hiring process was one of the most valuable things to me. We negotiated $30,000 additional total comp. My comp when I started working with Josh was $165k annually. My new comp is 2.5x that amount. I don’t know what to do with the extra money. I guess I’m going to invest it and maybe donate some to non profits I’m affiliated with.
I reached out to Josh for coaching because I was unsure of what the potential ceiling was, and was concerned I had low balled myself when the recruiter initially asked about my salary expectations. The outcome was fantastic! I felt Josh had my best interest in mind throughout the entire process, and he got me almost back to the initial counter. I had no idea we could get the bump that we did. I negotiated $14k more in base salary, $32k in year 1 bonus, $50k in year 2 bonus, and 500 more RSUs.
Technical Program Manager
I weighed the cost/benefit of hiring Josh. There are other far less expensive options and I believe I could have done pretty well negotiating myself, but you tend to “get what you pay for”.
The process was enjoyable, Josh was quick to help, and the results were strong. I ended up with a $50k+ increase in compensation year one and I have a good four-year outlook that I’m happy with.
I did not want to get to my next job and realize I came in too low or underleveled because I didn’t believe in myself or thought I would prove myself after I was hired rather than entering at my value. With Josh’s inside knowledge of how leveling works, I was able to hit pause on an L6 offer and inception my way to an L7 over six months. In the negotiation, we left NOTHING on the table. NOTHING. I negotiated for an additional $80k signing bonus, or $40k a year.
Working with Josh went splendidly. I negotiated €9.600 more base compensation, €10.000 signing bonus and €11.600 more equity. The best part was definitely getting a pre-written counter offer. I would not have known how to formulate and focus on the value I am bringing to AWS half as well as Josh did.
Josh helped me realize my worth in a way that I never thought possible. He helped me negotiate $600k in total compensation, which was beyond my wildest dreams and $20k more than Amazon offered for the position. The money will completely transform my financial security and ability to invest/retire. I also have a better foundation for negotiating any offers in the future (although I’ll be using Josh going forward for every single job).
Senior Manager, Technical Program Management
Before hiring Josh, I wasn’t sure if paying $3,000 was worth the money or not. Now, I am convinced beyond doubt. I negotiated a $45,000 increase in signing bonus and vesting equity. I’m very excited and grateful for the outcome. It means salary, etc. is out of my mind now and I can just walk into the job with single-minded focus on getting the job done.
Senior Technical Program Manager
I truly appreciated having Josh walking me through the process and the script/words he provided to help me in every conversation. I had more confidence in my asks and value because of those scripts and knowing I was relying on Josh’s data and experiences. I negotiated an additional $65,000 cash bonus over two years and an additional 13 shares. I’m thrilled with the result and am confident that I was able to negotiate the best deal possible for this role because of Josh’s help.
Partner Development Specialist
I was worried about not having experience in negotiating with Amazon, given the financial opportunity I had before me. I felt like I was in very good hands with Josh. He gave me clear steps on how to best proceed and we put together a strong case to anchor high from the onset. We ended up at the highest end of Amazon’s range, which is something that I don’t think I could have done on my own, as I’m not sure I would’ve had the confidence to anchor as high as we did in the counter offer.
Senior Marketing Manager
I’ve never negotiated an extra dollar for myself in any job offer or raise, and I had tried a couple times before.
Having a third party actually validate my concerns was more helpful than I expected. I couldn’t get that from most of my friends and family because they are either co-workers or people not familiar with the industry.
There’s a lot of anxiety and it can feel like there’s deadlines and urgency to making decisions and communicating back, even if it’s not necessarily the case. With Josh, there was a lot of strategic planning around how to time responses properly and when to take a phone call versus send an email. Both of those things I think worked out to help me get the best outcome.
The fact that Josh helped me get an additional $74,000 was amazing. It wasn’t unexpected to get more money, but it was unexpected to get that much more money. I definitely would not have been able to get the offer I did without Josh’s help.
Software Development Advocate
I'm Josh Doody, a professional salary negotiation coach who helps High Earners negotiate their job offers. On average, High Earners improve their first-year compensation by $47,273 with my help.
Apply for a free 15-minute intro call to learn how I can help.