Amazon TCT: Is it an official policy?

Bose XUQC61
Jul 3 10 Comments

I've been reading through blind, and Amazon posts often have a TCT. I specifically asked HR what the target compensation was for my offer, and if the TCT I calculated on my own was correct. The response I got back was that there was no such thing as TCT, and that the company isn't trying to conform compensation to a specific number over 4 years. This seems strange. There must be a grant price, or they couldn't calculate a year 1 or year 2 compensation. It also doesn't align with what I've read about the potential of being given additional stock if it under performs.

Can anyone confirm if a Amazon has a specific annual TCT for each employee?

Also, does anyone know the official Amazon TCT formula?

The two that I've come up with on my own are :

Assume No Growth:
(Base(4) + Yr1 bonus + Yr2 Bonus + RSU(grant_price) )/4

Assuming 15% YoY Growth (what I've read that amazon does):
( Base(4) + Yr1 bonus + Yr2 Bonus + RSU(grant_price)( .05 + 1.15(.15) + 1.32225(.40) + 1.520875(.40) ) )/4

grant_price = (given_yr1_estimated_comp - Base - Yr1 Bonus) / ( RSU(.05) )

The second formula yields the year 2 number I was given over the phone, and confirms the grant price.

These result in significantly different TCTs. If we aren't all aligned with how we're calculating compensation, the offer evaluation threads may be slightly less useful than we all imagined.

So you don't have to ask:
Using formula 1 my TCT would be ~321k
Using formula 2 my TCT would be ~358k
Amazon L6

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TOP 10 Comments
  • Amazon / Eng bCxp50
    Amazon absolutely has a TCT policy, which depends on your place in the annual performance review buckets. It's also something they will never openly disclose to you (or are not supposed to, per policy).

    Anyway, the easiest way to calculate your TCT is to find out your OLR bucket and the bands for your level and role. The 15% formula that people use is intended to reverse engineer your rating from your annual comp adjustment and/or newly granted RSUs. Odds are that you will targeted be at the bottom of the band for your first several years, so your TCT will always be below your actual projected compensation (meaning you will get a very small base adjustment and no additional RSUs). For many people who joined between 2014-2016, Amazon's TCT policy meant that most of them got no additional shares regardless of performance (even top tier) because their projected comp was always in excess of the TOP of the band, let alone whatever their actual target was.

    In general, you're either targeted to the top of the band (top tier), to the bottom (most of the rest), or to 0 (least effective and likely heading for termination). For L6 SDE, the band is $252k (70% of employees) to $378k (20%, or TT).
    Jul 3 1
    • Mozilla / Design ToadNode
      Taking this into account, would you recommend an Amazon candidate negotiate for a higher base salary or TCT before accepting a job offer?
      Jul 5
  • Booking.com / Other
    Punani

    Booking.com Other

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    Punanimore
    Did your Amazon offer actually state the average TC over 4 years? I thought they only calculate the year 1 TC estimate.
    Jul 3 1
    • Bose XUQC61
      OP
      The written offer only stated year 1. When I was told over the phone, I was told year 1 and year 2.
      Jul 3
  • Apple I45dw9df
    TCT for new hires doesn’t work like it would after your first year. TCT applies to to the Amazon fiscal calendar year (4/1 - 3/31 if I remember right), not your start date or even calendar year.

    If you wanted the closest thing to TCT for new hire (using your start date) it would be like so:

    [b = base; s = signon; r = RSUs count * stock value today]
    Year 1: b + s+ (r * .05 * 1.15)
    Year 2: b + s+ (r * .15 * 1.15^2)
    Year 3: b + (r * .4 * 1.15^3)
    Year 4: b + (r * .4 * 1.15^4)

    This can get really screwy once you start getting more stocks granted because those will vest on the amazon fiscal year instead of your start date fiscal years. If your start date is between July and September your year 4 will look like a cliff if you’re still at the same level because you will only have a vest at the beginning of the fiscal year and not the second half (even though the total dollar amount is at least what you calculate it will be today).
    Jul 3 0
  • Latch ayyyyyy
    Your TCT is pretty easy as a new hire... its salary + bonus + end of year grant. TCT is only a meaningful thing to calculate for the people who are going through yearly review.
    Jul 3 1
    • Amazon / Eng bCxp50
      It's actually the same as a normal employee with the standard rating ("highly valued"), so bottom of the band for level and role. In fact, if the employee joins late in the year, they could have a "too new" or "highly valued with no additional investment" rating which is effectively the same as "least effective" when it comes to comp adjustment calculations (meaning you get NO base adjustment and there is NO chance of an RSU refresher).

      TCT is simply used for calculating annual base adjustments and refresher grants; the new hire offer packages are a bit divorced from that.
      Jul 3
  • Expedia Group mSPf87
    What's TCT????
    Aug 3 0
  • Twitch / Product WeOQ66
    Yes, TCT is a policy.
    Jul 4 0
  • Microsoft
    DjenNow

    Microsoft

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    Google, Amazon, Facebook
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    What was the offer given to you?
    Jul 3 0

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