Amazon: Both ISS & Glass Lewis Have Come Out Against the Stock Awards at Amazon
Meeting May 26
Andrew Jassy, who replaced founder Jeff Bezos as CEO in July 2021, had total compensation of $212,701,169 of which most of it is made up of a stock award. I believe this is the highest pay package the company has ever offered. Jeff Bezos, like several other founder CEOs, did not take large compensation packages because his holdings were so monumental. This is the first year the company moves into a more typical sort of payment package and shareholders are not pleased with how the transition has been handled. While the award vests over a relatively long period of times, 10 years, it does not include performance criteria.
Glass Lewis and ISS have both recommended that shareholder vote against the pay package. Glass Lewis is quoted in Fortune as saying, “The annualized value of Mr. Jassy’s award considering the vesting period is $21.4 million, reasonable but for the fact that the company only stated that the award is ‘intended to represent most of Mr. Jassy’s compensation for the coming years.’ The vagueness of the statement and lack of commitment, in our opinion, provide little assurance to shareholders concerned with excessive pay.” ISS is said to also have objected to the award.
Multiple shareholders have raised concerns at the company this year, and Comptroller of the City of New York has urged shareholders to vote against the re-election of non-employee directors Daniel Huttenlocher and Judith McGrath who serve on the Leadership Development and Compensation Committee due to concerns regarding the company's human capital management. In a supplemental filing with the SEC in April they specifically note, “The Committee's decision to grant the company’s five highest paid executives approximately $400 million in compensation in 2021, including $212 million in time-vested restricted stock to new CEO Andrew Jassy, exacerbates our concerns about where the Committee’s priorities lie. Amazon’s 6,474-to-1 CEO-to-median compensated employee ratio confirms these concerns.”
Specifically, the Comptroller takes issue with the fact that the Committee has refused to meet with institutional investors on certain issues and contends that the Committee has not adequately overseen health and safety, with adverse consequences for Amazon and its employees. According to the filing,” Amazon’s labor practices, repeatedly investigated by regulators, have been found to violate state and federal law and also conflict with Amazon's own human rights policy. Unusually high employee turnover relative to peer companies has some Amazon executives worried about running out of hirable employees in the U.S.”
In addition, the company faces 13 shareholder proposals that are detailed by ICCR here.
Finally, it is worth noting that Amazon also has unusually high director compensation. An excessive payment to directors can limit their willingness to rock the boat. Amazon has an unusual policy where they did not give directors any cash payments, and instead award them equity. Two non-employee directors, Edith Cooper and Wendell Weeks, received restricted stock units awards in 2021 that were valued at $958,171 and $999,026.