Jeff Bezos became a billionaire and one of the richest men in the world as the founder and long-time CEO of Amazon (AMZN) – Get Amazon.com, Inc. Report. He held that chair until July 2021 when he stepped aside to spend more time focused on his space company, Blue Origin.
His replacement, Andy Jassy, may not become a billionaire right away, but his compensation package has him well on his way, Jassy will have a total compensation package of $212 million, but it’s not simply a big paycheck.
“Jassy received a restricted stock unit award for 61,000 shares, which vests over 10 years from grant, from 2023 through 2031, with more than 80% of the shares scheduled to vest between 5 and 10 years after grant,” the company shared in a proxy filing.
So, while Jassy will get a big payday, it’s actually strongly tied to the performance of the company’s shares. Jassy’s base salary will remain the same relatively modest $175,000 he collected in his prior role as Amazon Web Services CEO.
How Did Amazon Set CEO Andy Jassy’s Pay?
Amazon’s board actually had to do something it has never done before. Since Bezos founded the company and had served as its only CEO, deciding how to pay his successor was a challenge. The company explained its approach in the proxy filing.
Faced with the first CEO succession in the Company’s history, the Leadership Development and Compensation Committee determined it important to provide for clarity and stability through an award that is designed to establish a long-term owner’s perspective and encourage bold, long-term initiatives, in the same manner that Mr. Bezos’s shares as founder incentivized him to focus on long-term, expansive growth. Accordingly, this award is intended to represent most of Mr. Jassy’s compensation for the coming years.
Scroll to Continue
The company also considered what Amazon’s rivals and other comparable large companies pay their CEOs.
“In making this grant, the Leadership Development and Compensation Committee reviewed realizable compensation data for Mr. Jassy currently and over the term of the award under various stock price performance assumptions, taking into account the vesting schedule of existing equity awards granted to him in previous years” according to the statement. “The Committee also reviewed current year and three-year average reported market compensation survey data for large technology and general industry CEOs, similar one-time awards made upon the promotion of CEOs of other large technology companies, and current year and three-year average reported and realized compensation of CEOs of other large-cap companies, including Alphabet, Apple, Meta, Microsoft, Salesforce, and Walmart.”
Bezos collects the same annual salary of $81,840 he did as CEO in his new role as executive chairman. Amazon also pays $1.6 million per year for his security.
How Much Do Big-Cap CEOS Make?
Amazon’s compensation committee reviewed data showing that the average realized compensation from 2018 through 2020 for the CEOs of Alphabet (GOOGL) – Get Alphabet Inc. Class A Report, Apple (AAPL) – Get Apple Inc. Report, and Microsoft (MSFT) – Get Microsoft Corporation Report, and for the COO of Meta (FB) – Get Meta Platforms Inc. Class A Report, ranged from $151 million a year to $220 million a year.
And while 2021 pay data has not been released for many of the top-earning CEOs, Equilar has a list of the highest-paid executives from 2020.
Those numbers don’t reflect any stock grants from past years, which in all three cases are likely very significant. Essentially, large-cap CEOs tend to get large grants that vest over multiple years when they first take the job. In future years, they may receive more options, making their actual compensation tricky to nail down.