Amazon Will Pay Employees A Lower Salary Due To Lower Stock Prices, Declining Demand For 5G Equipment Will Result In The Loss Of 1,400 Jobs At Ericsson
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Amazon is in the middle of one of the most difficult financial problems in the company's history. In November, the biggest round of layoffs the company has ever carried out began as Amazon adjusted to faltering retail demand coupled with years of mass hiring. Then there's the problem of low pay. Moreover, a manufacturer of telecommunications equipment decides to reduce employment.
Lower salary
Amazon pays its corporate employees a large portion of their annual wages in capped stock units, and the prolonged decline in the company's stock is putting salaries for 2023 between 15% and 50% below projected targets Amazon has set for employees.
Amazon has historically given employees a lower base salary than its big-tech counterparts, but has made up the difference with stock awards that have been purchased over several years. Employees say the longer an Amazon employee stays with the company, the more their pay may depend on stock awards, with stock accounting for 50% or more of total income for some.
Amazon share price
Over the past year, Amazon shares have fallen more than 35% as a result of a broader tech slowdown and slower growth on Amazon's retail side. When Amazon issues limited shares to employees, it is based on a long-standing assumption shared in compensation talks that Amazon shares will appreciate at least 15% each year.
Until recently, this was largely true. From 2017 to the beginning of 2022, the share price increased by an average of about 30% per year. But Amazon stock is currently trading at around $97 a share, and some employee compensation packages are built on the assumption that Amazon stock will cost around $170 a share.
Layoffs and no new jobs
By January, Amazon had laid off 18,000 corporate employees, the most of any tech company in this latest wave of layoffs.
In addition to eliminating current positions, Amazon also revoked job offers from some applicants who had accepted and had not yet started, and delayed the start date of some new hires by six months. The information previously informed about the canceled offers.
Ericsson and layoffs
Ericsson plans to cut around 1,400 jobs in Sweden as the telecommunications equipment giant struggles with slowing demand for its 5G equipment in markets such as the US. Ericsson last month reported a lower-than-expected quarterly profit and warned that the start of the new year is uncertain as telecom operators in markets such as the US hold back on placing new orders for 5G equipment amid economic uncertainty.
The cuts are part of an effort the company announced late last year to cut costs by SEK 9 billion, equivalent to around $861 million, by the end of 2023 by streamlining processes, closing facilities and reducing the number of consultants.
Ericsson has just concluded negotiations with Swedish unions and plans to cut jobs under a voluntary scheme, a spokeswoman said on Monday. In the coming days, managers will share with their employees how this affects each unit.
Ericsson share price
Ericsson shares are at an all-time low, last seen in 2017. Currently, the share price is at 5.76.
Source: wsj.com, finance.yahoo.com
