Amazon Restricted Stock Units Becoming an Owner

AMZN
Amazon
Restricted
Stock Units
Becoming an Owner
For employees in the United States
You Are an Amazon Leader;
You Are an Owner
Ownership is one of the leadership principles that guides every Amazonian.
Owners think long term. They act on behalf of the entire company. They never
say “that’s not my job.”
One of the ways we foster ownership among employees is through Restricted
Stock Unit (RSU) awards. RSUs are a key part of our global compensation
program, which has been carefully designed to help us attract, motivate and
retain employees of the highest caliber.
An RSU is a right to receive a share of Amazon.com common stock after
you’ve worked for the company for a certain amount of time and met other
service conditions.
RSUs are awarded at no cost to you, and you don’t have to enroll in the
program to participate, but you must activate and certify your RSU account
with our stock plan administrator Morgan Stanley.
This brochure will tell you what you need to know and how to accept your
RSU award. For more details about RSUs, visit the Employee Stock (RSU) page on
Inside Amazon, go to www.morganstanleyfa.com/amazon or call the Employee
Resource Center at 1-888-892-7180.
We’ve included a glossary of key terms at the end of this brochure to help
answer any questions you may have.
Our Mission
Amazon.com strives to be Earth’s most customercentric company, where customers can find and
discover anything they might want to buy online,
and endeavors to offer its customers the lowest
possible prices.
What’s Inside
What You Need to Know....................................................................................... 2
What Is an RSU?...................................................................................................................... 2
Who Is Eligible to Receive RSUs?....................................................................................... 2
When Are RSUs Awarded?................................................................................................... 2
What Is an Award Agreement?............................................................................................ 2
How Many RSUs Will I Receive?......................................................................................... 2
What Is a Vesting Period?..................................................................................................... 2
Will I Have to Pay Anything When My RSUs Vest?......................................................... 3
What Happens to My RSUs If I No Longer Work for Amazon?.................................. 3
Are RSUs Taxable?.................................................................................................................. 3
What You Need to Do.............................................................................................. 6
Activate and Certify Your RSU Account Online..............................................................6
Keep Your Contact Information Up-to-Date...................................................................6
What You Can Do With Your Shares............................................................. 8
Where to Get More Information..................................................................... 9
Morgan Stanley Service Center..........................................................................................9
Helpful Definitions...............................................................................................................10
1
What You Need to Know
What Is an RSU?
A Restricted Stock Unit (RSU) is a right to receive a share of Amazon.com
common stock after you’ve satisfied the vesting period.
Who Is Eligible to Receive RSUs?
Generally, all full-time Amazon employees in the United States are eligible to
receive RSU awards.
When Are RSUs Awarded?
In general, all eligible Amazon employees receive an RSU award at the time they are
hired. Additional RSU awards, if any, are determined on an annual basis in April.
What Is an Award Agreement?
The RSU Award Agreement is a legal document that describes your award’s
terms and conditions, such as the number of RSUs awarded and the vesting
requirements. When it’s time to review and accept your agreement, it will be
posted to your online RSU account and you will receive a notification email
from Amazon’s stock plan administrator Morgan Stanley.
How Many RSUs Will I Receive?
RSU awards are based upon job level. For certain job levels and positions, other
factors, such as an employee’s compensation range and the results of annual
performance reviews, may also be considered.
What Is a Vesting Period?
The vesting period is an amount of time you must work full-time as an Amazon
employee for your RSUs to become Amazon.com shares. For example, if
you were awarded 10 RSUs with a two-year vesting period on April 1, 2013,
the vesting period for those 10 RSUs would end on May 15, 2015. Generally,
to satisfy the vesting requirements, you can have no breaks in service during
the vesting period and you must be a full-time employee at the time the RSUs
vest. Information about breaks in service is located on Inside Amazon. Vesting
periods will be stated on your Amazon RSU Award Agreement.
2
Will I Have to Pay Anything When My RSUs Vest?
It depends. For employees in job levels 1 through 4, Amazon will pay associated
transaction fees at the time RSUs vest. All other employees will pay a fee of $11.95
per transaction when their RSUs vest. Fees and commissions also will apply when
you sell your vested shares. These rates are posted on Inside Amazon as well as
on Morgan Stanley’s Benefit Access website (www.benefitaccess.com). Turn to
What You Can Do With Your Shares on page 8 for more information.
What Happens to My RSUs If I No Longer Work for Amazon?
If your employment or service relationship with Amazon ends for any reason,
any unvested portion of your award will be forfeited. All the stock from vested
RSU awards will remain in your RSU account until you choose to sell it.
Are RSUs Taxable?
In general, the value of your RSUs is considered taxable income to you. On
each vest date, Amazon must collect from you enough cash to cover the
minimum tax-withholding obligation that arises on that date. By accepting your
RSU award, you are directing Morgan Stanley to sell enough of your vested
shares to pay the minimum tax withholding on each vest date. You can change
this election online during the vesting period. (See Paying Taxes: Your Options
on page 5.) Where required, Amazon will report your RSU income and taxes
paid through payroll; details will be available on your pay statement.
Tax laws are complex and vary by country and local tax jurisdiction. You should
consult a tax advisor regarding the tax consequences of any RSU transaction.
3
Tax Withholding Example
(For Illustration Purposes Only)
The details of your RSU award, the share price and your income tax withholding
may be different.
RSU Award Date:
April 1, 2013
Vesting Date:
May 15, 2015 (2-year vest period)
Number of RSUs Awarded:10
Fair Market Value on Vest Date:$350
Taxable Income:
10 x $350 = $3,500
Tax Due:
$3,500 x 35%* = $1,225
Shares Sold to Cover Taxes:
$1,225 ÷ $350 = 4 shares**
Net Shares Deposited in RSU Account:
10 – 4 = 6 shares
Value of Net Shares: 6 x $350 = $2,100
* Tax rates vary by country; this rate is for illustration purposes only. If your account is not
active and certified, backup withholding would apply to the sale of shares and is due at a
rate of 28% for U.S. individuals and 31% for non-U.S. individuals.
** Shares will be rounded up to the nearest whole share. Any cash resulting from selling
a whole share that is not used for taxes will be paid to you through payroll. Any shares
remaining will be deposited into your account.
A Note About Fractional Shares
Beginning April 1, 2014 any cash resulting from a fractional share will be paid to
you through your local payroll, and not through your RSU account.
4
Paying Taxes: Your Options
You can change your tax withholding election by logging in to your RSU
account at www.benefitaccess.com. Or, you can call a Morgan Stanley Service
Center representative. You have three options for paying your taxes:
1. Sell Enough Shares to Cover Taxes. Unless you choose a different option,
this is how your required tax withholding will be satisfied. On the vesting date,
Morgan Stanley will sell enough vested shares on your behalf to satisfy the
required tax withholding amount. The proceeds from the sale will pass through
your RSU account to Amazon, and then from Amazon to the relevant tax
authorities. Any cash remaining after your tax withholding is satisfied will be
refunded to you through local payroll.
2. Pay Cash. You may choose to pay your tax-withholding obligation with cash.
You must estimate the tax withholding and send sufficient money to your RSU
account by wire transfer two business days before your RSU vesting date. The
cash will cover your tax obligation and all shares will be deposited into your
RSU account.
3. Sell All Shares. This option, which is available only to Amazon employees in
job levels 1 to 8, allows you to direct Morgan Stanley to sell all your shares at
the time they vest. A portion of the cash generated from the sale will be used
to cover your tax obligation. At the time you change your tax election, you will
choose how you would like the cash distributed to you: by wire transfer, by
deposit to your RSU account or by check.
RSUs Are Subject to Amazon’s Insider Trading Policy
All employees are subject to Amazon’s Insider Trading Policy. In accordance
with this policy, certain employees can only trade Amazon.com securities
during designated trading windows, and certain employees must obtain
pre-clearance from the Amazon Legal Department before selling any shares.
For more information about Amazon’s Insider Trading Policy, visit Inside
Amazon > Employment > Employee Stock (RSU) page or send an email to
[email protected]
5
What You Need to Do
1. Activate and Certify Your RSU Account Online
You must activate and certify your RSU account at Morgan Stanley to receive
your first RSU award. This step is simple and can be completed in five to seven
minutes online.
Don’t Wait! If you do not have an active and certified RSU account at the
time your RSU award vests, you may be subject to backup withholding of
28% to 31%. Morgan Stanley is required by the United States Internal Revenue
Service (IRS) to apply backup withholding if you have not certified your tax
status. Backup withholding applies to all employees worldwide regardless
of country of citizenship. Additional shares will be sold automatically to
cover any backup withholding.
You’ll receive instructions for activating and certifying your account once your
RSU award has been approved by the Amazon Board of Directors. Generally,
this occurs about three months after your hire date.
Fulfillment Center (“FC”) Employees: You will receive two mailings at home
from Morgan Stanley. One mailing will include your RSU account user name;
the other will include your temporary password. If you have misplaced this
information, you can request new mailings by calling a Morgan Stanley Service
Center representative. See contact information on page 9.
Corporate/CS Employees: You will receive your instructions in a welcome
email from Morgan Stanley to your Amazon alias. Just click the link in the
email to get started. If you’ve misplaced the email, you can request a new one
by visiting www.benefitaccess.com and clicking on the Forgot User Name/
Password link.
2. Keep Your Contact Information Up-to-Date
Important RSU information, such as account statements, transaction
confirmation statements and tax information, are delivered to you based on
your contact information in PeoplePortal. Be sure to keep this information upto-date. You can contact your Human Resources representative to assist you.
6
Important Notes!
If you already have a Morgan Stanley or Smith Barney account …
If you previously worked for a company that had Morgan Stanley or Smith
Barney as its stock plan administrator, simply log in to your current account to
activate your RSU account. You do not need to update your tax status. Your
W-9 will carry over from your previous account. To verify your W-9 certification,
log in to your RSU account, click on the MyProfile tab and look under Tax and
Banking Information.
If you had Amazon RSUs in a Charles Schwab account …
Charles Schwab was Amazon’s stock plan administrator up to March 31, 2014.
As of April 1, 2014, any unvested RSUs were transferred automatically to your
new Morgan Stanley RSU account.
If you had any RSUs that vested before April 1, 2014, those shares will remain in
your existing Schwab One brokerage account. If you are interested in transferring
your shares from Charles Schwab to Morgan Stanley, download a Transfer Form
from Inside Amazon or call a Morgan Stanley Service Center representative.
For questions about your Schwab One brokerage account, contact Charles
Schwab directly at 1-800-654-2593. Additional information can be found on
Inside Amazon > Employment > Employee Stock (RSU) page.
If you need help activating and certifying your account …
For step-by-step instructions, use the RSU Account Activation Guide, which
is available on www.morganstanleyfa.com/amazon. Or, you can contact the
appropriate Morgan Stanley Service Center listed on page 9.
7
What You Can Do With Your Shares
Keep Them or Sell Them. It’s Up to You.
Once you satisfy the vesting period, your RSUs will become shares of Amazon.com
common stock and will be deposited into your RSU account (less any applicable
taxes). Once your shares are in your account, what you do with them is up to you.
Keeping Your Shares. As an Amazon.com shareholder, you’ll share in the
company’s success. The value of your shares will change over time depending
on Amazon’s stock price. Your vested shares are yours even if you leave the
company. They will remain in your RSU account until you sell them.
Selling Your Shares. You can sell your vested shares at any time, subject to
any applicable restrictions under Amazon’s Insider Trading Policy. All sales are
subject to Amazon’s Insider Trading Policy, so be sure you’re familiar with it.
You will be responsible for paying any fees or commissions resulting from
a sale. Morgan Stanley’s fees will apply whether you sell your Amazon shares
online or through a Morgan Stanley broker.
• Under 500 shares: $14.95 per transaction
• 500+ shares: $0.03 per share
For more information about selling shares, log in to your RSU account at
www.benefitaccess.com.
What Are My Shares Worth?
Number of Shares (vested or unvested)
x Fair Market Value of Amazon.com Stock
= Value of Your Shares
Track your share price by visiting the Investor
Relations home page on Amazon.com or by
going to www.nasdaq.com and typing in our
stock ticker AMZN.
8
Where to Get More Information
Access Your RSU Account
www.benefitaccess.com
Learn More About Amazon Restricted Stock Units
• Inside Amazon > Employment > Employee Stock (RSU) page
• www.morganstanleyfa.com/amazon
Morgan Stanley Service Center
+1 866-533-2575 (toll-free)
+1 801-617-7471 (toll)
8 a.m. to 8 p.m. Eastern Time
Monday through Friday
Scan this code with your
Kindle or smartphone to learn
more about Amazon RSUs and
to watch a short RSU video.
9
Helpful Definitions
Agreement: (Also known as “Grant Agreement” or “Award Agreement”) The RSU
agreement is a legal document that sets forth the terms and conditions that
apply to your award.
Fair market value: The average price at which all shares are sold on behalf of
Amazon employees to cover withholding taxes on a given RSU vest date.
Grant: An award of RSUs.
Grant or award date: The date your award was granted to you.
Restricted Stock Unit (RSU): An RSU is the right to receive one share of
Amazon.com, Inc. common stock in the future, provided you meet certain
conditions. When an RSU award vests, the shares automatically become yours.
Shares: Shares of stock in a company, representing ownership.
Unvested grant: The portion of a grant that has not yet met the vesting criteria
as set forth in the Grant or Award Agreement.
Vested grant: A grant that has met the vesting criteria as set forth in the Grant
or Award Agreement.
Vesting period: The length of time or waiting period before the RSUs vest.
Vesting schedule: The number or percentage of RSUs that vest over a particular
time period and the dates on which they vest.
Form W-9: Form used by a U.S. individual to establish tax status for U.S.
withholding tax purposes.
Form W-8BEN: Form used by a non-U.S. individual to establish foreign status
for U.S. withholding tax purposes. If applicable, this form can be used to claim
a reduced rate of, or exemption from, withholding as a resident of a foreign
country with which the U.S. has an income tax treaty.
10
This brochure highlights the terms of the Amazon Restricted Stock Units program for
employees in the United States. It is not intended to provide a complete description of
the plan. Although every effort has been made to ensure information in this brochure
is accurate, the provisions of the official plan documents will govern in case of any
discrepancy. Amazon’s Benefit Plans and Programs are subject to review by the Company
and may be modified or terminated at any time for any reason. This Guide does not create
a contract of employment between Amazon and any employee.
© 2013 Amazon.com, Inc. All rights reserved.