Last month, Amazon laid off over 18,000 employees and, as a result, the company incurred a cost of $640 million in severance packages in the quarter ending December. This figure also covers the severance packages for employees who were terminated in January.
According to Amazon’s CFO, Brian Olavsky, the charge of $640 million relates to the position eliminations announced in Q4 and was largely incurred in mid to late January. The first three weeks of salary for terminations in January are included in the operating results for Q1, but the costs for weeks or months of severance coverage and job placement are part of the $640 million charge in Q4.
The majority of the job cuts by Amazon primarily affected its retail stores and device businesses, as well as the human resources teams. The severance charges for these employees were primarily recorded in the technology and content, fulfillment, and general administration categories on Amazon’s income statement.
This indicates that the majority of the impact was felt by these specific departments and teams within the company. The cost of these layoffs, including the severance packages, is a significant burden for Amazon and highlights the challenges the company is facing in the current macroeconomic environment.
