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Amazon's "Formula Swapping" is Detrimental to Shareholders

At the May 30, 2018 annual meeting of shareholders, Newground Social Investment and Investor Voice called on Amazon to end a ‘double standard against stockholders.’


Here is the full text of our chief executive Bruce Herbert's statement at the Amazon shareholder meeting:

Ladies & gentleman, I’m Bruce Herbert, and I stand on behalf of Newground Social Investment and Investor Voice to seek your support for Proposal #6 on simple-majority voting.

Proposal 6 seeks a simple-majority formula to counter a procedure called “Formula Swapping” which rigs the vote against environmental, social, and governance concerns brought forward by shareholders. How is this done?

When shareholders abstain and formally decline to vote either FOR or AGAINST a proposal, Amazon systematically takes those abstentions and counts them as if they were AGAINST votes.

There’s not an issue of concern to a progressive, sustainability-minded investor that is not being systematically harmed by “Formula Swapping”. Wide-spread in corporate America, “Formula Swapping” most commonly involves counting management’s board election one way, then applying a more stringent formula to shareholder-sponsored items. This is precisely what Amazon does.

Rev. Jesse Jackson spoke of need for greater opportunity for all.

Swapping formulas like this has the invariable effect of depressing the vote on shareholder items, such that in the past ten years more than 100 shareholder-sponsored items at U.S. companies have been subverted — achieving a true 50%-or-above majority when counted as board elections are counted, but being made to fail when counted with the more stringent formula imposed by management on shareholder items.

The crux of the issue is this:
1. Amazon uses the most lenient vote-counting formula to count its board election.
2. It uses a more stringent formula for shareholder items, which depresses the vote.
3. This differential treatment harms shareholder interest.

Campaign to separate CEO and Board Chair positions.


4. Amazon stands nearly alone among NW peers by engaging in these practices. Those who do not “Formula Swap” include: Nordstrom, Costco, Weyerhaeuser, Starbucks, Zillow, Redfin, Boeing, and Microsoft, among others.

5. Amazon’s voting policies are described in the proxy in an opaque and difficult to understand way. In fact:

A sample survey of institutional investors revealed that 90.1% found Amazon’s description of its voting policies to be convoluted and unclear.

6. Amazon makes the categorical statement that “vote counting methods apply identically to shareholder-sponsored and management-sponsored proposals” — identically! — but this is not truthful because:

Amazon deploys “Formula Swapping” to count its board election differently (and more leniently) than shareholder items.

In closing, please vote to end Formula Swapping — a “double standard against stockholders” — cast your vote FOR Proposal #6.

Thank you!


Banner of protesters outside the shareholder meeting.