Amazon RSUs

Avier Wealth Advisors is not affiliated with Amazon. While Avier communicates with its clients regarding their Amazon employee benefits, and educates itself on the Amazon Benefits, there is no guarantee that the information we have provided is accurate. Amazon employees are encouraged to contact their employer should they have any questions regarding their specific employee benefits.

What are RSUs?

Restricted Stock Units (RSUs) are shares of Amazon stock that Amazon employees are awarded as a part of their total compensation package. Rather than receiving these shares all at once, shares vest over time. For many Amazon employees, these RSUs can make up a large portion of their total compensation package. RSUs can be awarded as a part of an initial compensation package and can also be awarded over time during an employee’s tenure with the company.

If you’re looking for a basic foundation on RSUs at Amazon and elsewhere, consult our blog post on RSU fundamentals.

When do Amazon employees receive RSUs and when do they vest?

Stock vests will begin on your first anniversary. Additional vests will take place at the end of year 2 and then every 6 months until you’ve been with the company for 4 years.

Many Amazon employees receive additional refresher RSUs as an Amazon employee over time. The following is a breakdown of Amazon’s initial grant vesting schedule. In this example we will assume you received $600,000 in RSUs and for simplicity, the stock price does not change.

  • End of year one – 5% of the initial grant ($30,000)
  • End of year two – 15% ($90,000)
  • Six months later – 20% ($120,00)
  • End of year three 20% ($120,000) for a total of $240,000 in year 3
  • Six months later – 20% ($120,000)
  • End of year four – 20% ($120,000) for a total of $240,000 in year 4
  • Your total stock vests = $600,000

Amazon RSU Withholding

For higher level Amazon employees, a good part of total compensation comes to you in the form of restricted stock units or RSUs. If Amazon is doing well as a company those RSUs are going to lead to more total income, and in turn a larger tax bill.

When you receive RSUs, they are treated as income, no matter what; so, Amazon is going to automatically withhold 22% of those shares for taxes. For high-earning individuals, 22% might not be enough, and you might find yourself with a surprise come April when you learn that you owe $10,000 or more in taxes than you initially anticipated. This is why a major element of our work with Amazon employees focuses on limiting the tax burden from RSUs.

Investing Strategies for Amazon Employees

As an Amazon employee it is important to understand how your compensation structure works and to develop an investment strategy. Compensation in your first two years of employment looks very different than how you are compensated in years three, four, and beyond which in turn shapes the ways in which you should think about managing and investing your RSUs.

In the video below we walk you through an example of how to automate your investing year by year, helping you grow your retirement savings, decrease your concentrated stock risk, and boost your short and mid-term saving goals.

 

How Does Market Volatility Affect Amazon RSUs?

The value of your RSUs are directly tied to the stock price of Amazon. Obviously, if Amazon does really well, you could experience positive spikes in your compensation. However, if Amazon’s stock price doesn’t do as well, you could see your total compensation remain relatively flat, or if the stock price drops you could see your total compensation go down.

If you do decide to hold onto your Amazon RSUs, it’s as if you’re given cold hard cash, and you choose to invest every dollar in Amazon stock. While every situation is different, we typically recommend selling your RSUs as soon as they vest. This will eliminate the chance of you building up concentrated shares of Amazon stock in your portfolio, which allows you to diversify your portfolio and can help protect your portfolio from market volatility and concentrated company risk.

MORE AMAZON INSIGHTS

For more information and advice from our Amazon-focused advisors visit our main Amazon page, or other pages focused on Amazon Compensation and Miscellaneous Benefits, or Amazon RSUs.

AMAZON 401(K)
& ROTH CONVERSION

AMAZON
RSU

AMAZON’S OTHER BENEFITS & COMPENSATION

READY TO GET STARTED?

Focused on your needs, we provide comprehensive financial planning and investment advisory strategies for individuals and families. We’d love to hear from you.