OK, my own brother just called to complain that my advice is coming too late, so I’ll try to post at least a couple of days before meetings. Thanks David. Amazon ($AMZN) is one of the stocks in my portfolio. Their annual meeting is coming up on 5/24/2012. Voting ends 5/23 on Moxy Vote’s proxy voting platform, which had ten recommendations “from good causes,” including three consolidations, when I checked and voted on 5/21. ProxyDemocracy.org had three funds voting. I voted with management 86% of the time.
I make it a practice to vote against pay packages where NEOs were paid above median in the previous year. Yes, I know, this is pretty crude analysis. I’ll make exceptions where something obviously warrants different treatment. However, I’m concerned that NEOs are taking a greater and greater portion of wealth generated by companies.
According to Bebchuk, Lucian A. and Grinstein, Yaniv (The Growth of Executive Pay, Oxford Review of Economic Policy, Vol. 21, Issue 2, pp. 283-303, 2005), the aggregate compensation paid by public companies to their top-five executives during the period 1993-2003 totaled about $350 billion, and the ratio of this aggregate top-five compensation to the aggregate earnings of these firms increased from 5 percent in 1993-1995 to about 10 percent in 2001-2003.
At the same time, few firms want to admit to having average executives, so they seek to compensate their executives at above-average levels. They survey executive compensation at corporations and then set compensation packages that are above average for their “peer group,” which is often chosen aspirationally. While the “Lake Woebegone effect” may be nice in fictional towns, “where all the children are above average,” it doesn’t work well for society to have all CEOs considered above average and their collective pay spiraling out of control.
AMZN’s SummaryCompensation Table shows that Jeffery Bezos, CEO, was the highest paid named executive officer (NEO) at about $10.7M in 2011. I’m using Yahoo! Finance to determine market cap and Wikipedia’s rule of thumb regarding classification. According to those sources, at about $96B AMZN is a large-cap company. According to the United States Proxy Exchange (USPX) guidelines (pages 9&10), using data from Equilar, the median CEO compensation for large-cap corporations was $10.8 million in 2010, so AMZN’s pay is below that median. I voted for the pay plan.
Several of the funds reported through Moxy Vote.com and ProxyDemocracy.org voted against some of the directors. However, since I don’t know their rationale and I’m relatively happy with current directions at the company, I’m voting in favor of all of them.
With regard to shareowner proposals, I voted for the proposal by Calvert asking the board to report to shareowners on how Amazon is assessing the impact of climate change on the corporation, and specifically risks related to greenhouse gas emissions, energy use, and logistics. This seems a reasonable request concerning a problem of epic proportions. Amazon should lead, not lag.
I also voted in favor of Investor Voice’s proposal for better disclosure of political expenditures. Again, after Citizens United this became even more of a pressing issues. Amazon should lead, not lag.
On all other proxy items, I voted as recommended by management.
Mark your calendars; here’s the deadline for proposals by shareowners for next year:
Proposals of shareholders to be considered for inclusion in the Proxy Statement and proxy card for the 2013 Annual Meeting pursuant to Rule 14a-8 under the Securities Exchange Act of 1934 must be submitted in writing to the Secretary of Amazon.com, Amazon.com, Inc., 410 Terry Avenue North, Seattle, WA 98109, and must be received by 6:00 p.m. Pacific Time on Friday, December 14, 2012. The submission of a shareholder proposal does not guarantee that it will be included in our Proxy Statement.
I’d almost be tempted to submit a proposal that Amazon include a hyperlinked index for its proxy statement but I’m afraid that would be thrown out under Rule 14a-8(i)(7) the “ordinary business” exclusion. With all the software wizards Amazon has, you would think they would want to minimize the frustration leve of shareowners looking through their proxy.
According to SharkRepellent.net, special meetings at Amazon can only be called by shareowners holding at least 30% of the voting power and no action can be taken by written consent of shareowners without a meeting. Those seem likely subjects for future proposals.