Amazon.com (AMZN), is one of the stocks in my portfolio. Their annual meeting is coming up on 5/21/2014. ProxyDemocracy.org had collected the votes of four funds when I checked and voted on 5/15/2014. I voted with management % of the time. View Proxy Statement. All that talent at AMZN and they didn’t even bother to provide a linked table of contents. Read Warnings below. Here’s how I voted my proxy at Amazon.
Compensation
AMZN’s Summary Compensation Table (page 19) shows CEO/Chair Jeffrey P. Bezos was the highest paid named executive officer (NEO) at about $1.6M in 2013. I’m using Yahoo! Finance to determine market cap ($134B) and Wikipedia’s rule of thumb regarding classification. AMZN is a large-cap company. According to Equilar (page 6), the median CEO compensation at large-cap corporations was $9.7 million in 2012, so AMZN is well within median. AMZN shares have under-performed the NASDQ over the one and two periods but has out-permormed over five years.
The company has not disclosed specific, quantifiable performance target objectives for the CEO, in contrast to 73.9% of companies that have provided such metrics. Additionally, AMZN’s failure to establish and disclose specific standards regarding minimum equity retention standards for its CEO and directors may weaken the ability of equity awards to align executives’ interests with long-term value creation.
GMIAnalyst
The GMIAnalyst report I reviewed gave AMZN an overall grade of ‘F.’ From their report the following were listed as potential areas of concern:
- Related Party Transactions
- Entrenched Board
- Overboarded Directors
- Waste Production
- Environmental Investigations
- Social Investigations
A few highlights from the report stood out:
- Amazon.com does not regularly publish a formal sustainability report. It does not currently report on its sustainability policies and practices via the Global Reporting Initiative, a commonly used and highly effective standard for such reporting, nor has it become a voluntary signatory of the UN Global Compact, yet another commonly employed global standard for achieving and maintaining more effective sustainability practices. In the area of workplace safety this company has not yet implemented OHSAS 18001 as its occupational health and safety management system, nor does it actively disclose its workplace safety record in its annual report or other reporting vehicle.
Board of Directors
- The company has failed to split the roles of CEO and chairman, which may compromise even further the board’s independence from current management interests. Split CEO and chairman roles are characteristic of 46.1% of companies in the S&P 500.
- GMI has flagged the board as potentially entrenched due to a high number of long-serving directors. Only 21.9% in United States have been flagged for having an entrenched board. Two thirds of the board has served 10 years or longer and the board includes no minorities. I voted against Tom A. Alberg to send a message.
- Thomas O. Ryder sits on four boards. That’s too many to be effective. I voted against him.
Other Proxy Issues
I voted in favor of the proposal by Investor Voice to report on political contributions. How can we hold the board accountable if we don’t know who they gave the money to?
| # | PROPOSAL TEXT | CorpGov | CALVERT | DOMINI | CBIS | AFSCME | |
|---|---|---|---|---|---|---|---|
| 1a | Elect Director Jeffrey P. Bezos | For | Against | Against | Against | Against | |
| 1b | Elect Director Tom A. Alberg | Against | Against | Against | Against | Against | |
| 1c | Elect Director John Seely Brown | For | Against | Against | Against | For | |
| 1d | Elect Director William B. Gordon | For | Against | Against | Against | Against | |
| 1e | Elect Director Jamie S. Gorelick | For | Against | Against | Against | For | |
| 1f | Elect Director Alain Monie | For | Against | Against | Against | For | |
| 1g | Elect Director Jonathan J. Rubinstein | For | Against | Against | Against | For | |
| 1h | Elect Director Thomas O. Ryder | Against | Against | Against | Against | Against | |
| 1i | Elect Director Patricia Q. Stonesifer | For | Against | Against | Against | Against | |
| 2 | Ratify Auditors | For | For | For | For | Against | |
| 3 | Ratify NEO Compensation | For | For | Against | For | For | |
| 4 | Report on Political Contributions | For | For | For | For | For |
Mark your Calendar
Proposals of shareholders to be considered for inclusion in the proxy statement and proxy card for the 2015 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, Inc., at Amazon.com, Inc., 410 Terry Avenue North, Seattle, Washington 98109, and must be received by 6:00 p.m., Pacific Time, on Thursday, December 11, 2014. The submission of a shareholder proposal does not guarantee that it will be included in our proxy statement.
Issues for Future Proposals
- No action can be taken without a meeting by written consent.
- Special meetings can only be called by shareholders holding not less than 30% of the voting power.
Warnings
Be sure to vote each item on the proxy. Any items left blank are voted in favor of management’s recommendations. (See Broken Windows & Proxy Vote Rigging – Both Invite More Serious Crime).I generally vote against pay packages where NEOs were paid above median in the previous year but make exceptions if warranted. According to Bebchuk, Lucian A. and Grinstein, Yaniv (The Growth of Executive Pay), aggregate compensation by public companies to NEOs increased from 5 percent of earnings in 1993-1995 to about 10 percent in 2001-2003.
Few firms admit to having average executives. They generally set compensation at 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, with their collective pay spiraling out of control. We need to slow the pace of money going to the 1% if our economy is not to become third world. The rationale for peer group benchmarking is a mythological market for CEOs.
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