A more than 35% drop in Amazon’s (NASDAQ:AMZN) share price over the past year has impacted the annual salaries of its corporate employees. As per a WSJ report, a considerable portion of Amazon employees’ pay consists of restricted stock units; thus, lower share price is expected to result in a 15% to 50% decline in 2023 salary.
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The e-commerce giant links the total compensation of its staff to the company’s long-term performance. The move helps to motivate employees to consider themselves owners of the company. Thus, Amazon’s base pay remains lower than peer companies, with the balance made up of stock awards that vest over several years.
The company’s performance in 2022 was impacted by a slowdown in Amazon Web Services (AWS) and retail business as macro pressures and inflation hit consumers’ spending power. Earlier this month, Amazon reported mixed Q4 results. Also, it provided lackluster guidance that fell below analysts’ expectations and noted that the headwinds are expected to continue for the next couple of quarters.
Is Amazon a Long-Term Buy?
Amazon has strong potential to grow in the long run, given its dominance. Also, the company remains well poised to benefit from its cost-cutting plans, which involve layoffs of 18,000 of its employees.
Additionally, AWS’s leadership position in the cloud infrastructure space and Amazon’s strong advertising business are expected to be other areas of profitable growth, once temporary headwinds are overcome.
Despite the substantial drop in market capitalization in 2022, the Wall Street community continues to be optimistic about AMZN stock. It is worth highlighting that the stock has already gained more than 13% so far in 2023.
Overall, the stock commands a Strong Buy consensus rating based on 36 Buys and two Holds. Amazon’s average price target of $137.05 implies 41% upside potential from current levels.
