AMZN Topics Compensation Discussion and Analysis

This excerpt taken from the AMZN DEF 14A filed Apr 17, 2009.

Compensation Discussion and Analysis

Amazon.com’s approach to compensating its employees, including its “named executive officers,” is to tie total compensation to long-term shareholder value, as reflected primarily in the Company’s stock price. “Named executive officers” are the Company’s (i) Chief Executive Officer, (ii) Chief Financial Officer and (iii) other three most highly compensated executive officers based on SEC regulations. The Company’s employment offer letters with its named executive officers provide for at-will employment, and named executive officer compensation generally consists of stock-based compensation, base salaries, new-hire cash bonuses and other compensation and benefits.

Stock-Based Compensation. The primary component of a named executive officer’s total compensation is stock-based compensation in order to closely tie total compensation to long-term shareholder value. Accordingly, named executive officers receive sizeable stock-based awards at the time of hire and are also eligible for stock-based awards on a periodic basis. Due to Mr. Bezos’ substantial ownership in the Company (approximately 23%), Mr. Bezos has never received any stock-based compensation from the Company.

Since late 2002, the Company has used restricted stock units as its primary stock-based compensation vehicle. The Company believes that restricted stock units align the long-term interests of named executive officers and shareholders and help efficiently manage overall shareholder dilution from stock awards. Restricted stock unit grant amounts and vesting for named executive officers, whether for new hire or subsequent grants, are established by the Leadership Development and Compensation Committee after receiving recommendations from the Vice President of Human Resources and the Chief Executive Officer.

For new hire grants, the Vice President of Human Resources, the Chief Executive Officer and the Leadership Development and Compensation Committee consider various factors, including past compensation from the named executive officer’s former employer, future compensation from such former employer that will be forfeited upon joining the Company, the compensation of similarly-situated senior executives at the Company, the named executive officer’s expected level of responsibility at the Company and expected contributions to the Company’s future success and the market compensation of similarly-situated executives at other companies as reflected in third party surveys.

For periodic grants, the Vice President of Human Resources, the Chief Executive Officer and the Leadership Development and Compensation Committee consider various factors, including the named executive officer’s level of responsibility, past contributions to Company performance, and expected contributions to the Company’s future success, as well as the market compensation of similarly-situated executives at other companies as reflected in third party surveys.

For both new hire and periodic restricted stock unit grants, the Vice President of Human Resources and Chief Executive Officer develop grant recommendations by subjectively evaluating the factors above to set a total compensation target for each named executive officer and then designing restricted stock unit grants to help meet those total compensation targets based on certain stock price assumptions, taking into account the named executive officer’s cash compensation and the estimated value of pre-existing stock-based compensation vesting in subsequent years, if any. In this process, the Vice President of Human Resources and Chief Executive Officer view projected total compensation for a given year as cash compensation expected to be earned in that year plus the projected value of stock-based compensation vesting in that year. Because the Company focuses on total compensation over time and takes into account existing compensation, periodic grants for a smaller number of shares do not necessarily reflect lower total compensation.

Based on the factors discussed above with respect to periodic grants, in April 2008, Mr. Szkutak received a restricted stock unit award with vesting beginning in May 2011, as his other restricted stock unit awards will be fully vested in February 2011, assuming continued employment. The Company has imposed additional vesting

conditions designed to qualify this award, along with certain other awards issued in previous years to named executive officers, as tax-deductible compensation under Section 162(m)(4)(c) of the Internal Revenue Code.

Base Salaries. Base salaries for named executive officers are designed to be significantly less than those paid by similarly situated companies. Base salaries for named executive officers during 2008 ranged from $81,840 for Mr. Bezos to $160,000 for the other named executive officers. Due to Mr. Bezos’ substantial ownership in the Company, Mr. Bezos again requested not to receive additional compensation in 2008 and has never received annual cash compensation in excess of his current amount. The salaries of the other named executive officers were increased in 2008 from $150,000 to $160,000.

New-Hire Cash Bonuses. New-hire cash bonuses generally are paid in monthly installments to a named executive officer. These bonuses are also determined by the Leadership Development and Compensation Committee after receiving recommendations from the Chief Executive Officer and the Vice President of Human Resources. Bonuses are generally designed to provide appropriate total compensation to named executive officers until their stock-based compensation begins to vest. In 2008, Messrs. Gunningham, Onetto and Valentine received new-hire cash bonus payments as shown in the “Bonus” column of the Summary Compensation Table.

Other Compensation and Benefits. Named executive officers receive additional compensation in the form of vacation, medical, 401(k), relocation and other benefits generally available to all of the Company’s employees. The Company provides security for Mr. Bezos, including security in addition to that provided at business facilities and during business-related travel. The Company believes that all Company-incurred security costs are reasonable and necessary and for the Company’s benefit. The Company provides relocation assistance to newly hired executives consistent with what it provides to other employees, and it provided this assistance to Mr. Gunningham in 2008. The amount attributable to relocation assistance for Mr. Gunningham is included in the “All Other Compensation” column of the Summary Compensation Table. The Company does not provide any other perquisites or other personal benefits to its named executive officers.

This excerpt taken from the AMZN DEF 14A filed Apr 18, 2008.

Compensation Discussion and Analysis

Amazon.com’s approach to compensating its employees, including its “named executive officers,” is to tie total compensation to long-term shareholder value, as reflected primarily in the Company’s stock price. “Named executive officers” are the Company’s (i) Chief Executive Officer, (ii) Chief Financial Officer and (iii) other three most highly compensated executive officers based on SEC regulations. The Company’s employment offer letters with its named executive officers provide for at-will employment, and named executive officer compensation generally consists of stock-based compensation, base salaries, new-hire cash bonuses and other compensation and benefits.

Stock-Based Compensation. The primary component of a named executive officer’s total compensation is stock-based compensation in order to closely tie total compensation to long-term shareholder value. Accordingly, named executive officers receive sizeable stock-based awards at the time of hire and are also eligible for stock-based awards on a periodic basis.

Since late 2002, the Company has used restricted stock units as its primary stock-based compensation vehicle. The Company believes that restricted stock units better align the long-term interests of named executive officers and shareholders and help efficiently manage overall shareholder dilution from stock awards. Mr. Szkutak, who joined the Company in 2002, received a restricted stock unit award at the time of hire and a subsequent restricted stock unit award in the second quarter of 2006. Messrs. Valentine and Onetto, who joined the Company in 2006, and Mr. Gunningham, who joined the Company in 2007, each received a restricted stock unit award at the time of hire. Mr. Bezos has never received any stock-based compensation from the Company.

Restricted stock unit grant amounts and vesting for named executive officers, whether for new hire or subsequent grants, are established by the Leadership Development and Compensation Committee after receiving recommendations from the Vice President of Human Resources and the Chief Executive Officer.

For new hire grants, the Vice President of Human Resources, the Chief Executive Officer and the Leadership Development and Compensation Committee consider various factors, including past compensation from the named executive officer’s former employer, future compensation from such former employer that will be forfeited upon joining the Company, the compensation of similarly-situated senior executives at the Company, the named executive officer’s expected level of responsibility at the Company and expected contributions to the Company’s future success and the market compensation of similarly-situated executives at other companies as reflected in third party surveys.

For periodic grants, the Vice President of Human Resources, the Chief Executive Officer and the Leadership Development and Compensation Committee consider various factors, including the named executive officer’s level of responsibility, past contributions to Company performance, and expected contributions to the Company’s future success, as well as the market compensation of similarly-situated executives at other companies as reflected in third party surveys.

For both new hire and periodic restricted stock unit grants, the Vice President of Human Resources and Chief Executive Officer develop grant recommendations by subjectively evaluating the factors above to set a total compensation target for each named executive officer and then designing restricted stock unit grants to help meet those total compensation targets based on certain stock price assumptions, taking into account the named executive officer’s cash compensation and the estimated value of pre-existing stock-based compensation vesting in subsequent years, if any. In this process, the Vice President of Human Resources and Chief Executive Officer view projected total compensation for a given year as cash compensation expected to be earned in that year plus the projected value of stock-based compensation vesting in that year. Because the Company focuses on total compensation over time and takes into account existing compensation, periodic grants for a smaller number of

shares do not necessarily reflect lower total compensation. For the 2007 new hire restricted stock unit grant, as well as certain other grants issued prior to 2007 held by executive officers, the Company imposed additional vesting conditions designed to qualify the award as tax-deductible compensation under Section 162(m)(4)(c) of the Internal Revenue Code, in addition to time-based vesting schedules.

Base Salaries. Base salaries for named executive officers are designed to be significantly less than those paid by similarly situated companies. Base salaries for named executive officers during 2007 ranged from $81,840 for Mr. Bezos to $150,000 for the other named executive officers. Due to Mr. Bezos’ substantial ownership in the Company (approximately 24%), Mr. Bezos again requested not to receive additional compensation in 2007 and has never received annual cash compensation in excess of his current amount. In addition, the salaries of the other named executive officers did not change in 2007.

New-Hire Cash Bonuses. New-hire cash bonuses generally are paid in monthly installments to a named executive officer. These bonuses are also determined by the Leadership Development and Compensation Committee after receiving recommendations from the Chief Executive Officer and the Vice President of Human Resources. Bonuses are generally designed to provide appropriate total compensation to named executive officers until their stock-based compensation begins to vest. In 2007, Messrs. Gunningham, Onetto and Valentine received new-hire cash bonus payments as shown in the “Bonus” column of the Summary Compensation Table.

Other Compensation and Benefits. Named executive officers receive additional compensation in the form of vacation, medical, 401(k), relocation and other benefits generally available to all of the Company’s employees. The Company provides security for Mr. Bezos, including security in addition to that provided at business facilities and during business-related travel. The Company believes that all Company-incurred security costs are reasonable and necessary and for the Company’s benefit. The Company provides relocation assistance to newly hired executives consistent with what it provides to other employees, and it provided this assistance to Messrs. Gunningham and Onetto in 2007. Amounts attributable to relocation assistance for Messrs. Gunningham and Onetto are included in the “All Other Compensation” column of the Summary Compensation Table. Mr. Onetto’s employment offer letter also provided for a severance payment, which expired under its terms in December 2007, if he was terminated during the first twelve months of his employment. The Company does not provide any other perquisites or other personal benefits to its named executive officers.

This excerpt taken from the AMZN DEF 14A filed Apr 27, 2007.