Amazon.com, Inc. (NASDAQ:AMZN)
Amazon made the announcement on February 2, 2021, that its founder and current CEO, Jeff Bezos, would be stepping down from his post sometime during the third quarter of 2021, and that Andy Jassy will take over in his stead. Given that Bezos has served as CEO of Amazon since the company’s creation in 1994, many people were taken aback when they heard this news.
Because Jassy had been at the helm of Amazon Web Services (AWS) since the company’s founding in 2003, he was viewed as the obvious choice to succeed Bezos. It is estimated that he was responsible for AWS’s growth to the point that it is now the largest provider of cloud computing services in the world, with a market share of more than 30 percent.
According to a report with the Securities and Exchange Commission made on Thursday, Amazon.com Inc. stated that it did not award its Chief Executive Andy Jassy any new shares in 2022, which resulted in a narrowing of the compensation gap between the online retailer’s top boss and rank-and-file employees.
At the same time, it gave more than $40 million apiece to the freshly elevated CEOs of e-commerce and cloud companies, at 2022 share prices, while Jassy took home a similar sum from his own earlier grants, the filing showed. All of these awards were based on the company’s share price in 2022.
Amazon (NASDAQ:AMZN) has been dealing with the effects of customers reducing their spending due to concerns about inflation and the economy for several months now. The corporation announced that in order to save expenses, it will be eliminating 27,000 employees as well as some stock awards.
In his annual letter to shareholders, which was published on Thursday, Jassy expressed his conviction that Amazon’s core e-commerce and cloud computing businesses still have room for expansion. Jassy also stated that he was certain the cost cuts will prove profitable.
He stated that the corporation was investing in new areas such as generative artificial intelligence, which has become a buzzword ever since OpenAI’s ChatGPT was released and has spurred a race for domination between Alphabet Inc. and Microsoft Corporation.
“LLMs (large language models) and Generative AI are going to be a big deal for customers, our shareholders, and Amazon,” he added, pointing out Amazon’s AI-focused solutions such as machine learning chips and the CodeWhisperer service that helps develop computer code. “LLMs” stands for “large language models,” and “Generative AI” stands for “generative artificial intelligence.”
According to the report, the pay ratio of Amazon’s median employee globally to Jassy was 1 to 38 in 2022. This equated to approximately $34,000 in comparison to the CEO’s compensation and perks package of $1.3 million. In 2021, the ratio was 1 to 6,474, which reflected Amazon’s prediction that it would take Jassy ten years to completely earn the stock grant she received.
Officials from labor unions and politicians in the United States have, for a long time, been critical of the disproportionately high salaries that CEOs receive in comparison to those of their employees, including at Amazon. According to Amazon, the typical annual salary for full-time employees in the United States was $41,762.
The firm stated that the award that Jassy received in 2021, which had an initial value of $214 million, was “intended to represent most of his compensation for the coming years.” Because of this, the company did not have any plans to bestow any additional stock in 2023 or in the previous year.
Since Amazon rewarded it, the package’s quality has significantly deteriorated. In 2022, the value of Jassy’s award and other, older grants both decreased by almost $148 million as a direct result of the decline in the company’s stock price.
Nevertheless, according to the report, he was awarded $31.9 million from prior grants that became fully vested in 2017.
The choice by Amazon to choose Andy Jassy as the next CEO is a daring move that has been well-received by the community of people working in the technology industry. Because of his extensive knowledge in cloud computing and product development, as well as his focus on providing excellent service to customers, Jassy is the most qualified individual to steer Amazon into the future. With Jassy at the helm, the organization is well-positioned to continue its dominance in the world of technology and to push the boundaries of innovation.
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