Amazon has implemented a major shift in its employee compensation strategy for 2025. The new salary model focuses on rewarding long-term performance rather than one-off achievements, making it a pivotal moment for the tech industry.

New Pay Structure Explained

Under the revised model, employees who consistently perform at a high level over four review cycles will now receive up to 110% of their pay band, compared to the previous 100%. However, first-time top performers will only receive 70% of their pay band, a drop from last year’s 80%.

The shift reflects Amazon’s intent to value long-term excellence. A spokesperson noted that the changes help Amazon recognize employees who “consistently exceeded expectations” for their roles.

Breakdown of Rating Tiers

• Consistent Top Performers (4 years): 110% of pay band
• First-Time Top-Rated: 70% (was 80%)
• Two Consecutive Top Ratings: 90% (was 100%)
• Promoted to HV2: 10% (was 20%)
• HV3 to HV2 Demotions: No change (20%)
• First-Time HV3 Earners: 40% (was 50%)

While the structure may seem restrictive to new employees, it aims to reward steady contributors. Amazon’s move aligns with broader industry trends. Microsoft, Meta, and Apple are also revising their pay systems to reward consistency and performance.

Transparency and Employee Concerns

Amazon has faced criticism for lacking transparency in how pay correlates with performance. Managers are still not allowed to disclose an individual’s Overall Value (OV) rating, leaving employees to infer their standing based on compensation changes alone.

This has raised concerns about morale and fairness, especially among new hires unfamiliar with the opaque system.

Stock-to-Cash Flexibility

To balance the shift toward stock-based rewards, Amazon is continuing a pilot programme that lets employees convert up to 25% of their stock grants into cash. This provides more immediate income flexibility for those who prefer short-term financial returns.

Industry Trend Toward Performance-Based Pay

Amazon’s model reflects a growing corporate trend. As reported by CNBC, companies like Google, Meta, and others are tightening internal reviews, reducing rewards for underperformance, and linking compensation more tightly to sustained output.

Also read: Meta Layoffs Reflect Industry Pay Reset | Apple’s AI Strategy and Talent Retention