Amazon announced last week that it is raising minimum wage for US and UK employees, but Nomura Instinet analysts say the pay hike comes at a cost.
“This was not all roses as Amazon is eliminating restricted stock options and monthly incentive bonuses for hourly employees,” a team of Instinet analysts led by Simeon Siegel said in a note sent out to clients on Monday.
By Siegel’s calculation, the wage increase – spanning full-time, part-time, temporary, and temporary agency employees in the US and UK- could drive $1.3 billion to $2.7 billion of incremental expenses. But the plan to phase its restricted stock units and variable compensations could save Amazon $900 million. Therefore, after excluding savings by eliminating benefits, Amazon could see a net cost of $400 million-$1.9 billion, suggesting only 15-70 basis point of deleverage, Siegel said.
Source: Business Insider
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