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Amazon Formula-Swaps at 2019 Meeting of Shareholders

Presentation of Proposal to end Vote-Rigging


I’m Bruce Herbert, and I stand on behalf of Newground Social Investment and Investor Voice to encourage support for Proposal #15 which asks Amazon to end a double standard: the use of unequal voting practices that handicap shareholders.

Amazon uses two vote-counting formulas in its proxy. One favors reelection of Board members. The other formula under-counts support for shareholder-sponsored items — a practice known as “formula-swapping”. The difference lies in how ABSTAIN votes are treated. Because abstentions are cast neither FOR nor AGAINST, they should not always be counted AGAINST shareholders, as Amazon does.

The math is quite simple: When abstentions are added to the formula it automatically reduces the vote. This stacks the deck against shareholders — which is unwarranted, and harms shareholder best interest. In fact, the vote on every shareholder proposal presented today will be systematically reduced by this practice.

The double standard of formula-swapping is a systemic issue. We’ve seen more than 100 votes in recent years that won when counted under a simple-majority standard, but “failed” when management swapped formulas to lower the tally on shareholder items.

In a striking example at another Seattle company, a winning 56.2% simple-majority vote was dropped 22 points to a 34.2% “failing” vote because of formula-swapping. That’s how it works — a company will choose the formula that benefits it the most, and in a single proxy will count in different ways — as Amazon does on shareholder items vs the board election.

Here’s how others view this:

  • Amazon’s high-tech peers FacebookApple, and Microsoft all count shareholder votes using a fair, simple-majority standard.
  • The Council of Institutional Investors (CII) writes in its Policy 3.7 that: “abstentions should be counted only for purposes of a quorum” (emphasis added).
  • Institutional Shareholder Services (ISS) writes that: “ISS believes that a simple majority of voting shares should be all that is necessary to effect change regarding a company and its governance provisions” (emphasis added).
  • The U.S. Securities and Exchange Commission (SEC) mandates a simple-majority formula for determining whether a proposal qualifies for resubmission.

In conclusion, it’s not widely known that Amazon employs a double standard to stack the deck against shareholders. Especially given the preponderance of shares controlled by Mr. Bezos and select others, there is no reason to grant management unwarranted additional power to sideline shareholder concerns and to handicap shareholder votes.

Therefore, please vote FOR proposal #15.

Thank you.