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Shareholder proposal to Amazon on 'Formula Swapping'

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Below is the full text of the shareholder proposal on fair and democratic vote-counting, filed by Newground Social Investment and Investor Voice on December 13, 2017 for presentation at the 2018 annual meeting of Amazon ($AMZN) in Seattle:

Resolved:  Shareholders ask the Board of Amazon.com, Inc. (“Amazon”) to take or initiate steps to amend Company governing documents to provide that all non-binding matters presented by shareholders shall be decided by a simple majority of the votes cast FOR and AGAINST an item.  This policy would apply to all such matters unless shareholders have approved higher thresholds, or applicable laws or stock exchange regulations dictate otherwise.

Supporting Statement:

This proposal seeks greater transparency, clarity, and understanding around how informed stockholders vote on shareholder proposals.  In voting, the meaning of “Abstain” is defined by the Oxford English dictionary as:

To formally decline to vote either for or against a proposal or motion.

A “simple majority” formula, therefore, includes votes cast FOR and AGAINST but not abstentions.  It provides the most democratic, clear, and accurate picture of the intent of shareowners who are both informed and decided, while not including in the formula the votes of abstaining voters who have declined to express an opinion.   

When abstaining voters choose to mark ABSTAIN it is apparent that they intend to vote neither FOR nor AGAINST an item.  Yet Amazon unilaterally counts ABSTAIN votes as if AGAINST every shareholder sponsored proposal.

  • It is unreasonable for Amazon to assert it knows the will of undecided voters (and to artificially construe abstentions in favor of management).

Companies have a choice whether or not to count abstentions – the voting formula Amazon uses is not mandated. 

Research demonstrates that counting abstentions systematically disadvantages shareholders: http://bit.ly/Voting-Research_Corporate-Secretary.

It does this by:

  • Depressing the appearance of support for shareholder concerns.  
    The math is simple:  When abstaining shareholders are instead treated as if they voted AGAINST a proposal, management benefits because the tally is lowered. 
  • Subverting vote outcomes.
    Counting abstentions has allowed companies to describe true majority votes as, instead, having ‘failed’.
  • Distorting communication.
    Annual meeting votes offer the only opportunity for most shareholders to communicate with Boards.  Counting abstentions as if AGAINST shareholder proposals, management changes how outcomes are reported and how the public perceives support for shareholder concerns.

We observe that Amazon’s Director Election (where management benefits from the appearance of strong support), does not count abstentions.  This means that management items and shareholder items do not receive equal treatment – though we call on the Company to count shareholder items as they do the Director election.

The Council of Institutional Investors (CII) has declared: “...abstentions should be counted only for purposes of a quorum” (emphasis added).

Therefore:  Support accuracy, fairness, and good governance at Amazon by voting FOR simple majority vote-counting on shareholder-sponsored proposals.