Amazon Overhauls Compensation Model to Favor Longtime Top Performers
Amazon is revamping its compensation strategy to significantly reward veteran employees who consistently demonstrate high performance over multiple years. The new guidelines, obtained by Business Insider, show that employees who achieve Amazon’s “Top Tier” performance rating for four consecutive years will now receive 110% of their pay range, up from the previous 100% cap. In contrast, first-time Top Tier recipients will see their payouts reduced to 70% of their pay band, down from 80% last year.
The revised structure places greater emphasis on an employee’s rating history rather than just current performance. For instance, employees moving from lower ratings to Highly Valued 2 (HV2) will receive 10% of their pay range, down from 20%, while those who drop from Highly Valued 3 (HV3) to HV2 will maintain 20%. First-time HV3 recipients will get 40% of their pay range, reduced from 50%.
The changes represent a significant shift in how Amazon distributes compensation across its workforce, benefiting employees who maintain top performance over multiple years while potentially disadvantaging newer high achievers and those with inconsistent performance records. Other technology companies like Google, Microsoft, and Meta have implemented similar performance-based compensation strategies.
Amazon’s compensation structure has faced internal criticism in the past for its lack of transparency and competitive nature of employee rankings. Managers are instructed not to share individual Overall Value (OV) ratings with employees, forcing staff to infer their performance based on compensation changes. The company is continuing its pilot program allowing employees to take 25% of their new stock awards in cash, addressing concerns from employees seeking more immediate financial returns rather than stock-based compensation.
Despite these adjustments, Amazon maintains that most employees who demonstrated performance improvements still saw pay increases this year. The company offers “multiple channels” through which employees can raise concerns about their compensation, according to a spokesperson.
