Online retail giant Amazon’s global influence means it now gets as many shareholder proposals as ‘old economy’ companies used to – and there’s even an investor webpage dedicated to them.
A round dozen shareholder proposals will be voted on at the company’s 22 May annual meeting, recalling, perhaps even surpassing, the headiest days at ExxonMobil and GE, which regularly got resolutions in the double figures.
Counting just the shareholder resolutions – there are three management proposals – the first requests an annual report on the management of food waste (Amazon not only owns Whole Foods Market, but also the online sellers Amazon Fresh and Amazon Direct), the second a reduction in the ownership threshold for calling special shareholder meetings, the third a suspension of sales – not an outright ban as the company categorises it – on government use of Rekognition, Amazon’s facial recognition software, the fourth a report on the impact of government use of Rekognition, the fifth a report on efforts to address hate speech in products sold on its site, the sixth calls for an independent board chair, the seventh a report on sexual harassment policies, the eighth – the employee resolution to be detailed in a later article – asks for a report on climate change issues, the ninth is a right-wing spoiler proposal on board ideology/diversity, the tenth calls for changes to the company’s gender pay reporting, the eleventh a report on integrating ESG metrics into executive pay, and the last on vote-counting practices for shareholder proposals.
There were only three proposals at last year’s meeting, on an independent chair, on vote counting, and on diverse board candidates.
The first two are repeated this year, but the last has been replaced by the right-wing spoiler from “True Diversity”. Last year’s results for the first two were 26% support and 8% support. The diverse board resolution was not voted on because prior to the meeting Amazon amended its corporate governance guidelines, stating: “I can confirm that the Amazon Board of Directors has adopted a policy that the Nominating and Corporate Governance Committee include a slate of diverse candidates, including women and minorities, for all director openings.”
This effectively implemented the proposal’s request. This year, True Diversity wants a board policy that breaks what it calls the ideological hegemony of Silicon Valley boards, which it correctly or incorrectly assumes to be a liberal, left-of-centre ideology.The results of last year’s votes were calculated by RI using the process asked for in the final resolution. In other words, RI did not add the abstain votes to the against votes and use that figure as the denominator, Amazon’s practice, which would have incorrectly reduced the level of shareholder support. The resolution on special meetings calls for the threshold for a vote to call one to be reduced from 30% to 20% of shareholders, in line with best practice. For the resolution on ‘certain products’ the filer, the Nathan Cummings Foundation’s Laura Campos, said that: “There appears to be a gap between Amazon’s policy on offensive and controversial materials and its practices,” noting that the company’s policy is to remove them immediately, but many can be found being sold on its site at all times.
On sexual harassment, the resolution calls for the company to report how its sexual harassment policies – which the company notes are already in place – are actually working. The resolution on gender pay reporting, said Natasha Lamb of Arjuna Capital, calls for “Amazon to take a more proactive stance on pay equity and publish its median gender and racial pay gap”.
The 2019 resolution total could have been as high as 17, but four were successfully challenged using the SEC’s no-action process – a process where a company asks the SEC to take no action if it excludes the proposal – and a fifth was withdrawn. A proposal on a human rights risk assessment for three food products was successfully challenged.
As was one calling for a Societal Risk Oversight Committee and another asking for a report on the community impacts of Amazon’s operations and a fourth asking the company not to engage in inequitable employment practices such as nondisclosure agreements.
Finally, Green Century withdrew its climate change proposal to allow the employee resolution full sway.
Others, somewhat surprisingly given the SEC’s current decisions on the “ordinary business” rule, made it to the proxy, despite challenges. Such as the food waste proposal and the resolution on hate speech. The two proposals on Rekognition were also challenged, unsuccessfully.
The meeting and the resolutions are so high profile that the ICCR, whose members are responsible for nine of the 12 proposals have set up a special page highlighting the meeting.
ICCR, in its press release, said that “the volume of proposals illustrates how the company’s unprecedented growth and global influence over multiple sectors and supply chains makes it vulnerable to reputational, competitive, financial, and regulatory risks” and that it does not have “the appropriate risk mitigation structures in place”. Amazon’s proxy statement contains the full resolution texts.
RI spoke to Mary Beth Gallagher, the director of Tri-State Coalition for Responsible Investment, specifically about the inclusion of two resolutions on Rekognition, a product of Amazon Web Services – a part of the company that few customers, few shareholders and even some company employees – as we have seen – are as yet aware. [Note: since this article was prepared, San Francisco has become the first city to ban facial recognition technology.]
“Resolutions 6 and 7 [3 and 4 in RI’s listing] have a lot of the same substance, but resolution 6 calls for a pause in further sales of Rekognition until risks are fully assessed, while resolution 7 calls for a report into the risks of the product,” she explained. “They were both robustly challenged at the SEC and again, even after we won the initial decision for inclusion. The SEC decided that there was merit to both of the resolutions coming before shareholders for a vote and we encourage investors to support them both due to the regulatory, legal, financial, human capital management and reputational risk the sales of the facial recognition technology presents. Although there may be more investors who would feel comfortable supporting the ask for an independent assessment,” she continued, “if an independent assessment is warranted, then sales should be prohibited until that risk assessment has been conducted.A conclusion in favor of a vote for resolution 7 means that resolution 6 is important as well – and there is no reason an investor cannot support both.”
Gallagher also tied all the proposals together: “The common thread among many of the resolutions is governance and risk oversight. The risks to civil and human rights of vulnerable communities are too great when equipping the government with a tool for mass surveillance, and the company doesn’t have adequate oversight. Heightened surveillance and potential misuse from these products are not something that they can protect against in their Acceptable Use Policy agreements with government customers.” Gallagher understatedly added: “It’s likely that there will be a big presence from investors there with each of the 12 resolutions having a representative.”
Before filing the resolutions, ICCR notes that 114 investors representing over $2.6 trillion in AUM sent a joint letter to Amazon in November 2018. Many of the investors had had prior engagement with Amazon, but the letter called for meaningful dialogue. “In our experience,” said the letter, “Amazon has purposefully avoided constructive and substantive dialogue with its shareholders.”
Responding to a request for comment, a company spokesperson said: “We operate in line with our code of conduct which governs how we run our business and the use of our products. We are committed to improving the diversity of our workplace, supporting communities by reducing family hunger and homelessness, and helping millions of young people from underrepresented backgrounds build careers in computer science through Amazon Future Engineer.”