After an unsuccessful organizing effort at Amazon.com Inc (AMZN.O) last month, union activists wait for the company’s annual shareholders meeting on Wednesday, hoping for a chance a worker on the board of directors of the largest online retailer.
A resolution from shareholders, including nonprofit Oxfam America, calls on Amazon to consider appointing an hourly employee to its board of directors. The proposal garnered the precious and rare support of leading proxy advisor Institutional Shareholder Services.
Amazon’s board has recommended shareholders reject the proposal and very few U.S. companies are giving workers a seat on the board. Yet the concept is gaining attention as investors focus on income inequality and social justice issues.
Amazon CEO Jeff Bezos said in a letter to shareholders last month that the company needs “a better vision for the success of our employees.” Bezos controls around 14% of Amazon’s shares, making investor-led reforms an uphill battle.
During the organizing campaign, some staff members voiced grievances, including fatigue from warehouse work and mandatory anti-union meetings. Yet employees at the Bessemer, Alabama warehouse ultimately rejected the formation of the company’s first US union by a margin of more than 2 to 1. Read More
Jennifer Bates, a Bessemer employee who supported the union effort, will present the resolution at Amazon’s annual meeting, according to Oxfam.
The proposal asks directors to consider hourly partners in their initial slate of new board candidates. Bates is expected to say Amazon has not listened to workers’ health and scheduling issues and that having a seat on the board would be “transformative,” according to prepared remarks shared with Reuters.
“It would send a signal that our voices matter,” Bates said in the remarks.
Amazon referred Reuters to the board’s statement against the proposal, that directors were already focusing on employee compensation and benefits, as well as workplace safety and culture. The company increased the starting wage to $ 15 an hour in the United States more than two years ago.
“We have also long recognized the importance of employee participation in our decision-making processes,” the board statement read.
THE ISS HOLDER CAN MOVE THE NEEDLE
For the meeting, Institutional Shareholder Services (ISS) supported eight other shareholder proposals contrary to the wishes of the board and recommended not approving executive compensation, although it recommended electing the 10 candidate directors of Amazon.
Various countries, including Germany, have requirements for worker representation on boards of directors, but only a few US companies have such representation, including major airlines Delta Air Lines Inc (DAL.N) and United Airlines Holdings Inc (UAL.O).
While a number of Democrats in Washington have called for such representation, similar shareholder proposals have garnered little support from other U.S. companies.
The proposals from Starbucks Corp (SBUX.O) in March and industrial systems maker Woodward Inc (WWD.O) in January each garnered just 7% of the votes cast, and others last year did not. not even been that good. [nL1N2K93EL]
One difference is that no proposal this year has had the backing of the ISS, whose support can displace 15% or more of shareholder votes, according to corporate election specialists.
In its May 13 report, ISS noted the controversies Amazon faces over working conditions in its warehouses and said that “employee representation on the board could potentially provide the company with meaningful information about needs of its workforce “.
Shareholder resolutions don’t need to win majorities to lead to change, as they show boards of directors the mood of investors. According to a recent study by BlackRock Inc, resolutions gaining between 30% and 50% support still led to changes at least two-thirds of the time.
The second-largest proxy advisor, Glass Lewis, has recommended investors oppose the director-nominee resolution, fearing it threatens board independence and shareholder value.
Courteney Keatinge, Glass Lewis’s senior director for ESG research who helped craft the recommendation, said the company would expect Amazon to respond if the proposal wins more than 51%. She said via email that “if it wasn’t obvious the company had responded or engaged in depth with shareholders on how to respond, we would likely have concerns.”
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