Notice of Exempt Solicitation. Definitive Material. (px14a6g)
May 05 2021 - 03:37PM
Edgar (US Regulatory)
Amazon.com, Inc (AMZN)
Item 5: Adopt Independent Board Chair Policy
Zevin
Asset Management, LLC, a registered investment advisor, seeks your support1 for
Item 5 on the Amazon.com, Inc (“Amazon” or “the Company”) 2021 proxy ballot. The resolved clause of this
shareholder proposal states:
Shareholders of
Amazon.com Inc (“Amazon” or the “Company”) urge the Board of Directors (the “Board”) to adopt a policy
to require that the Chair of the Board shall be an independent director who has not previously served as an executive officer of the Company.
This policy should
be implemented so as not to violate any contractual obligations, with amendments to the Company’s governing documents as needed.
The policy should also specify the process for selecting a new independent Chair if the current Chair ceases to be independent between
annual meetings of shareholders. Compliance with the policy may be excused if no independent director is available and willing to be Chair.
We respectfully request
your vote FOR Item 5 for the following reasons:
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1.
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An independent board chair policy is a commonsense corporate governance
reform.
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An independent board chair would be separate from
the CEO. They would have no material relationship or affiliation with the company, and they would not be a former executive officer of
the company. This would enable the independent chair to provide new insights and better oversight for Amazon.
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Independent
board chair policies are generally endorsed by proxy advisory firms Glass Lewis2
and ISS3.
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According
to the Council of Institutional Investors (CII): “Having an independent chair helps
the board carry out its primary duty—to monitor the management of the company on behalf
of its shareowners. A CEO who also serves as chair can exert excessive influence on the board
and its agenda, weakening the board’s oversight of management. Separating the chair
and CEO positions reduces this conflict, and an independent chair provides the clearest separation
of power between the CEO and the rest of the board.”4
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According
to Glass Lewis, “Board independence has been accepted as a best practice worldwide.”5
Citing a Farient Advisors study, Glass Lewis stated that “97% of countries surveyed
accepted a separate chair/CEO as a best practice, 53% of which have statutory requirements
mandating this separation.”6
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1 This
communication is an exempt proxy solicitation submitted pursuant to Rule 14a-6(g)(1) promulgated under the
Securities Exchange Act of 1934. Submission is not required under the terms of the Rule, but is made voluntarily in the interest
of public disclosure and consideration of these important issues. This is not a solicitation of authority to vote your proxy and
Zevin Asset Management, LLC will not accept proxies if sent. Zevin Asset Management, LLC urges shareholders to vote for the proposals
discussed in this communication following the instructions provided on the management’s proxy mailing. The cost of this communication
is being borne entirely by Zevin Asset Management, LLC.
2 http://www.glasslewis.com/wp-content/uploads/2017/03/2017-In-Depth-Independent-Chair-marked-copy-2.pdf
3 https://www.issgovernance.com/file/policy/active/americas/US-Voting-Guidelines.pdf
4 https://www.cii.org/independent_board
5 http://www.glasslewis.com/wp-content/uploads/2017/03/2017-In-Depth-Independent-Chair-marked-copy-2.pdf
6 http://4fgic6b9bwz16wnpt2p0bnpb-wpengine.netdna-ssl.com/wp-content/uploads/2016/11/Global-Trends-in-Corporate-Governance.pdf
2 Oliver Street, Suite 806, Boston, MA 02109 |
(617) 742-6666 | invest@zevin.com
Zevin Asset Management, LLC
Item 5 at Amazon.com, Inc (2021)
Page 2
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According
to a Yale School of Management paper, “The independent chair curbs conflicts of interest,
promotes oversight of risk, manages the relationship between the board and CEO, serves as
a conduit for regular communication with shareowners, and is a logical next step in the development
of an independent board.”7
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2.
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Amazon lacks an independent board chair. Executive Chair Jeff Bezos would not provide essential independent oversight.
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CEO and Chair Jeff Bezos plans to step down from the CEO role this year and
stay on as Executive Chair. Chair Bezos will lack independence due to his role as founder, his long history as a leader of Amazon, and
his significant share position.
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In
his last letter to shareholders, Mr. Bezos stated that Amazon must “do a better job
for our employees” and announced that, in addition to serving as Executive Chair, he
will lead an effort to make Amazon “Earth’s Best Employer and Earth’s Safest
Place to Work.” Mr. Bezos plans to work with Amazon’s Ops team to “help
invent in this arena.”8
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Evidently Mr. Bezos is still heavily invested in Amazon’s prior decision
making and its current initiatives, which undermines his ability to provide competent and independent oversight of management. At the
same time, as Executive Chair, Mr. Bezos’s stature as founder and significant shareholder may also unduly hamstring the new CEO
going forward.
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3.
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Amazon especially needs the risk oversight that an independent board chair would provide.
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In its statement on Item 5 in the 2021 Proxy Statement9,
Amazon claims that an independent board chair is not needed because the Lead Director provides competent oversight. With due respect
to Mr. Rubinstein, neither the Lead Director nor the rest of the board have acted sufficiently to oversee and curb the troubling risk-taking
behavior of Amazon’s executive team.
Amazon executives, including Mr. Bezos and incoming CEO Andrew Jassy,
have carried out a litany of risk-taking strategies. These include:
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Failure
to address labor concerns and over-the-top anti-union practices – Late last year,
Reveal reported on a “mounting injury crisis at Amazon warehouses” and
alleged “bald misrepresentations” by the company as an apparent attempt to hide
the extent of its safety problem.10 In February 2021, New
York’s attorney general sued
Amazon for poor COVID-19 precautions and retaliating against
workers.11 In
a recent article titled “How Amazon Crushes Unions,” The New York Times reported
on extreme tactics employed by Amazon in its fight to prevent workers from forming a
union in its facilities in Bessemer, Alabama and elsewhere — tactics such as alleged
worker surveillance, intimidation, and even changing traffic light timing to prevent workers
from speaking with union organizers after their shifts.12 The National Labor Relations
Board is expected to review alleged violations in the Bessemer election.13
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7 https://web.law.columbia.edu/sites/default/files/microsites/millstein-center/2009%2003%2030%20Chairing%20The%20Board%20final.pdf
8 https://www.aboutamazon.com/news/company-news/2020-letter-to-shareholders
9 https://www.sec.gov/Archives/edgar/data/1018724/000110465921050333/tm2035374-1_def14a.htm
10 https://revealnews.org/article/how-amazon-hid-its-safety-crisis/
11 https://www.cnbc.com/2021/02/17/new-york-attorney-general-sues-amazon-over-covid-shortfalls.html
12 https://www.nytimes.com/2021/03/16/technology/amazon-unions-virginia.html
13 https://news.bloomberglaw.com/daily-labor-report/amazon-union-election-fails-now-what-nlrb-process-explained
Zevin Asset Management, LLC
Item 5 at Amazon.com, Inc (2021)
Page 3
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Aggressive
contracting with the Pentagon, Department of Homeland Security (DHS) and U.S. Immigration
and Customs Enforcement (ICE) – Amazon is still fighting to be awarded a $10 billion
Department of Defense cloud computing contract called JEDI. The contract was initially awarded
to Microsoft, and now Amazon is fighting both Microsoft and the Pentagon in the courts.14
In 2018, MIT Technology Review reported that Amazon cloud services were powering
ICE’s Investigative Case Management (ICM) system, which is “a critical component
of ICE’s deportation operations.” MIT Technology Review also reported
that Amazon Web Services (AWS) “hosts several of DHS’s other major immigration-related
databases and operations, including all the core data systems for USCIS [U.S. Citizenship
and Immigration Service] and biometric data for 230 million individuals, including fingerprints,
face records, and iris scans, which are playing a growing role in immigration enforcement
around the country.”15 Amazon’s activities were targeted by the high-profile
#NoTechForICE campaign and denounced by such groups as Make The Road, Mijente, and ACLU.16
This creates potential reputational risk for Amazon.
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Controversial
products such as Rekognition – In 2020, Amazon placed a one-year moratorium on
selling its facial recognition software (“Rekognition”) to police departments
amid “growing concerns that the technology may lead to unfair treatment of African-Americans.”17
The company has acknowledged that national regulation does not exist to help manage
the risks of this technology and says it invites regulation, but the product remains controversial.
In 2018, Amazon workers protested the company’s involvement in Rekognition and government
contracting that could be considered ethically questionable.18
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The above are pressing examples of environmental, social, and governance
(ESG) challenges facing Amazon. Each of these areas has the potential to become a material problem threatening Amazon and its investors.
However, in these areas and more, Amazon executives have apparently taken on excessive risk and injured relationships with key stakeholders,
such as workers and communities.
Conclusion
Amazon needs an independent board
chair to help confront the company’s many challenges and properly oversee executives’ risk-taking behavior. Current corporate
governance arrangements are evidently not fit-for-purpose, and they threaten Amazon’s continued success.
Shareholders are urged to vote FOR Item 5 following the instructions
provided on the company’s proxy mailing.
For questions regarding Amazon Item 5 on Independent Chair Policy,
please contact Sonia Kowal, Zevin Asset Management, 617.742.6666, sonia@zevin.com.
14 https://www.bizjournals.com/washington/news/2021/04/28/court-denies-doj-microsoft-bid-to-dismiss-jedi-aws.html
15 https://www.technologyreview.com/2018/10/22/139639/amazon-is-the-invisible-backbone-behind-ices-immigration-crackdown/
16 https://www.washingtonpost.com/business/2019/07/12/no-tech-ice-protesters-demand-amazon-cut-ties-with-federal-immigration-enforcement/;
https://www.aclu.org/news/immigrants-rights/aclu-calls-on-tech-companies-to-end-their-alliance-with-ice-and-cbp/
17 https://www.nytimes.com/2020/06/10/technology/amazon-facial-recognition-backlash.html
18 https://www.vox.com/technology/2018/10/18/17989482/google-amazon-employee-ethics-contracts
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