As the founder and longtime CEO of Amazon, Jeff Bezos became a billionaire and one of the richest men in the world (AMZN) – Get report from Amazon.com, Inc. He held that chair until July 2021, when he stepped aside to focus more time on his space venture, Blue Origin.
His successor, Andy Jassy, may not become a billionaire immediately, but his compensation package is on the right track, Jassy will have $212 million in total compensation, but it’s not just a big paycheck.
“Jassy received a Restricted Stock Unit Award for 61,000 shares vesting over 10 years after grant from 2023 to 2031, with more than 80% of the shares vesting between 5 and 10 years after grant,” the company said in a with proxy submission.
So while Jassy will get a big payday, it’s actually heavily tied to the performance of the company’s stock. Jassy’s base salary remains at the relatively modest $175,000 he earned in his previous role as CEO of Amazon Web Services.
JD Lasica via Wikimedia Commons
How did Amazon determine CEO Andy Jassy’s pay?
Amazon’s board of directors actually had to do something they’ve never done before. Because Bezos founded the company and served as its sole CEO, deciding how to pay his successor was a challenge. The company explained its approach in the proxy filing.
In light of the company’s first CEO succession, the Leadership Development and Compensation Committee felt it was important to provide clarity and stability through an award designed to establish a long-term ownership perspective and encourage bold, long-term initiatives in the same way that stocks do of Mr. Bezos as a founder led him to focus on long-term, expansive growth. Accordingly, this award is intended to represent the majority of Mr. Jassy’s compensation for years to come.
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The company also took into account what Amazon’s competitors and other comparable large companies pay their CEOs.
“In making this award, the Leadership Development and Compensation Committee reviewed the compensation achievable dates for Mr. Jassy currently and over the life of the award under various stock price performance assumptions and considered the vesting schedule of existing stock awards granted to him prior years,” the statement said Message. “The committee also reviewed the reported year-to-date and three-year average market compensation survey data for CEOs of large technology companies and general industry, similar one-time awards granted in the promotion of CEOs of other large technology companies, and the year-to-date and three-year average reported and realized Compensation from CEOs of other large-cap companies, including Alphabet, Apple, Meta, Microsoft, Salesforce, and Walmart.
In his new role as executive chairman, Bezos will receive the same annual salary of $81,840 as he did as CEO. Amazon also pays $1.6 million a year for its security.
How Much Do Big Cap CEOs Earn?
Amazon’s Compensation Committee reviewed data showing that from 2018 to 2020, average realized compensation for Alphabet CEOs (Google) – Get Alphabet Inc., Apple’s Class A report (AAPL) – Get the Apple Inc. and Microsoft report (MSFT) – Get the Microsoft Corporation Report and for the COO of Meta (FB) – Get Meta Platforms Inc. Class A Report, ranged from $151 million per year to $220 million per year.
And while 2021 salary data hasn’t been released for many of the highest-earning CEOs, Equilar has a list of the highest-paid executives of 2020.
- Satya Nadella, Microsoft: $44 million
- Doug McMillon, Walmart (WMT) – Get a $22 million Walmart Inc. report
- Tim Cook, Apple: $14 million
- Sundar Pichai, Alphabet, $7 million
These numbers do not reflect stock awards from previous years, which are likely to be very significant in all three cases. Essentially, large-cap CEOs typically receive large grants that vest over several years when they first take the job. They may get more options in the coming years, making it difficult to determine their actual compensation.