Amazon.com Inc.’s board of directors today voted to approve a 20-for-1 stock split that will revalue the company’s shares.

The split – the first in more than two decades – will take effect in June, subject to approval from shareholders at the company’s annual meeting in May.

In addition, Amazon said its board has authorized a $10 billion buyback of common stock. It replaces a previous plan to buyback of $5 billion worth of stock that was approved back in 2016. Under that plan, however, Amazon only bought back $2.12 billion of its shares.

Stock splits do not mean shareholders gain any more or less value. Rather, they’re a cosmetic change that makes individual shares easier to manage and more accessible to a larger number of investors as they lower the barrier to entry. Nonetheless, that accessibility can make the share more attractive, and indeed Amazon’s shares rose almost 7% in extended trading late today.

Stocks splits are not uncommon; Google LLC’s parent company Alphabet Inc. announced a similar 20-for-1 stock split in February, while Apple Inc. previously gave its investors three additional shares for each one they owned in a four-to-one stock split in August 2020.

Amazon has split its stock on three occasions in the past, but never in this century. Its last stock split came in September 1999, when it announced a 2-for-1 split two years prior to the dot-com bust.

Amazon’s stock price at market close on Wednesday was $2,758.58. If the split had happened today, it would mean each existing shareholder would receive 19 additional shares for every one they own, at a new price of $139.28 each.

What’s interesting about the stock split is the timing. It comes within the first year of new Amazon Chief Executive Andy Jassy’s (pictured) tenure, which began in July. Amazon’s stock has been the worst-performing of all major technology companies since then, and is down more than 16% since the start of this year. Moreover, Amazon in its most recent earnings call revealed its slowest rate of quarterly growth since 2001.

To boost the company, Amazon recently announced that it’s increasing its maximum base salary for corporate workers from $160,000 to $350,000. Previously, Amazon has always relied more on generous stock awards to attract executive talent, but with its shares underperforming last year, that’s no longer such an attractive incentive.

The stock split is designed at least in part to benefit Amazon’s corporate workers. The company said it would give its employees “more flexibility in how they manager their equity” while also making its stock more accessible to new investors.

Amazon said that assuming the stock split is approved at its May meeting, distributions will be made to shareholders at the close of markets on June 3, with trading on a split-adjusted basis to begin on June 6.

Photo: SiliconANGLE