An activist shareholder and consumer group is calling on Amazon founder Jeff Bezos to give up the chairman role of the company he started 24 years ago. The group, known as SumOfUs, has put forth a shareholder proposal for vote at Amazon’s annual shareholder meeting on May 30th, which calls for a separation of the CEO and Chairman roles.
“We believe the combination of these two roles in a single person weakens a corporation’s governance, which can harm shareholder value,” the group writes in its proposal, which can be found on page 16 of the company’s proxy statement. “As Intel’s former Chair Andrew Grove stated, “The separation of the two jobs goes to the heart of the conception of a corporation. Is a company a sandbox for the CEO, or is the CEO an employee? If he’s an employee, he needs a boss, and that boss is the board. The chairman runs the board. How can the CEO be his own boss?”
Amazon’s board, in the proxy filing, urges shareholders to vote against the proposal, noting that Bezos is well positioned to work with the board “on the key policy and operational issues that will help the Company operate in the long-term interests of shareholders.”
“We believe that it is important for the Board to continue to determine on a case-by-case basis the most effective leadership structure for the Company, rather than take a rigid approach to board leadership, as called for by the shareholder proposal. In addition, in reviewing this proposal, the Board took into consideration relevant benchmarking data and concluded that the proposal’s rigid approach is not common practice.”
It’s unlikely that the proposal will pass, and Bezos is often lauded as the visionary innovator who makes Amazon tick. Amazon’s stock has increased from about $275 per share five years ago to nearly $1,600 per share today, and the board cited the stock performance in recommending that shareholders reject the proposal.
SumofUs is a consumer and shareholder activist group, which says its mission is to “put bad corporations back in their place and “tames corporate beasts like Pepsi, Nestlé and Monsanto.”
Big tech titans are a bit mixed on whether the CEO also holds the chair role. At Microsoft, for example, Satya Nadella serves as CEO, but the board chair role is held by former Symantec CEO John Thompson. Apple CEO Tim Cook holds a seat on the board, but the chairman role is held by former Genentech CEO Arthur Levinson.
But founders often tend to hold onto the chair position.
At Netflix, founder Reed Hastings serves as CEO and chairman. That’s also the case at Facebook, where Mark Zuckerberg holds both the CEO and chairman role.
Last year, 49 percent of S&P 500 companies combined the chairman and CEO roles, according to the Spencer Stuart U.S. Board Index 2017 in data cited in the Amazon proxy.
Full press release from SumOfUs here:
Amazon (NASDAQ: AMZN) Shareholders Call for Independent Board Chair
SumOfUs Says Amazon CEO Jeff Bezos Should Not Be His Own Boss
Ahead of Amazon’s annual general meeting of shareholders on May 30th, Amazon shareholders, represented by SumOfUs, an international consumer group, have submitted a shareholder resolution (ITEM 5) calling on the company to separate the role of CEO and chair of the board, creating an independent Board Chair.
Amazon’s current Chief Executive Officer (CEO) Jeff Bezos also currently serves as Chair of the Board.
VIEW THE SHAREHOLDER PROPOSAL ON PAGE 16 OF THE PROXY HERE: https://s3.amazonaws.com/s3.sumofus.org/images/Amazon_2018_Shareholder_Proposal.pdf
Renowned proxy advisory firm, Glass Lewis has previously come out in support of shareholder resolutions calling for the separation of the roles of CEO and board chair. In a 2016 report, Glass Lewis explained that:
“…Shareholders are better served when the board is led by an independent chairman who we believe is better able to oversee the executives of the Company and set a pro-shareholder agenda without the management conflicts that exist when a CEO or other executive also serves as chairman.”
An independent Board Chair has been found in some academic studies to improve the performance of public companies. Separating the roles of Chair and CEO is the norm in Europe, and 51% of S&P 500 boards split the Chair and CEO roles. In an article in The Washington Post about Facebook’s corporate governance structure in 2017, SumOfUs argued that that an independent Chair of the Board would be better able to oversee the executives of the company, improve corporate governance and set a more accountable, pro-shareholder agenda. SumOfUs believes Amazon.com should also adopt these changes for a similar set of reasons.
“There is a clear conflict of interest when a corporation’s board of directors, which is responsible for overseeing the CEO and representing shareholders, is chaired by that same CEO,” explained Lisa Lindsley, Capital Markets Advisor for SumOfUs. “An independent board chair is a necessary first step to put Amazon’s board on the path to effective representation of the interests of all shareholders.”
“Independent Board leadership would be particularly useful at Amazon in providing more robust oversight regarding the company’s association with right-wing organizations including NRATV and Breitbart. In addition, Amazon has faced increased criticism for workforce exploitation, tax avoidance, and monopolistic practices. Independent Board leadership would result in improved policies and practices to mitigate these risks,” added Lindsley.
Earlier this year, more than 37,000 SumOfUs members called on Amazon to stop streaming NRA TV. The petition comes as the NRA doubled-down on its defense of the “right” to own military-grade assault rifles after calls from Parkland high school shooting survivors to institute common-sense gun safety reforms.
VIEW THE PETITION HERE: https://actions.sumofus.org/a/nratv-streaming-services/
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SumOfUs.org is a global movement of consumers, investors, and workers all around the world, standing together to hold corporations accountable for their actions and forge a new, sustainable and just path for our global economy.