Amazon Braces For Compensation Criticism at Annual Meeting

Amazon will face a record 18 shareholder resolutions at its annual meeting this week, with outside groups urging the company to disclose more about its treatment of employees and more closely tie executive compensation to performance. From a report: Major shareholder advisory firms recommend investors approve calls for assessments of Amazon employees' working conditions and freedom to organize, as well as the risks posed by the company's sales of surveillance products. Between them, Institutional Shareholder Services and Glass Lewis are urging investors to support five resolutions brought by outside shareholders.

The two firms say shareholders should block the re-election of director Judith McGrath, chair of the board's leadership and compensation committee, and recommends a no vote on a symbolic measure to ratify Amazon's executive pay. The company's annual meeting of shareholders, held virtually since the beginning of the pandemic, is scheduled for Wednesday. The shareholder resolutions and say-on-pay votes are nonbinding. Investors delivered a rebuke to Amazon in 2022 over its pay practices, only narrowly approving salaries amid concerns about big stock grants awarded to top executives regardless of how well the company performed in subsequent years. The board conducted outreach with major investors following that vote but didn't adjust its plans, which Glass Lewis called "significantly concerning."

"Meritless pay" for executives proves the obvious.

[Eunomion]

The structure of corporations is a massive sham, and the boards are more or less only there to consume the company as prey rather than make it a productive enterprise. Needless to say, the "meat" they eat is the value produced by others, who are effectively robbed in the process.

It's painfully obvious that executive pay tied to performance should be a matter of law.

Re:"Meritless pay" for executives proves the obvio

[rudy_wayne]

It's painfully obvious that executive pay tied to performance should be a matter of law.

How do you define "performance"? That's the problem.

All CEOs already have much of their compensation tied to "performance". The problem is, it is all based on the one thing that the company has no control over .... their stock price. If the stock goes up, that's considered "good performance" and if the stock goes down its bad.

You see this in news articles all the time. The people who are rated as the "Best CEO" are always the people whose company's stock price is high, with no mention of anything else, like how many people quit because working for that company sucks.

And so the CEO spends most of his time trying to game the system, trying to figure out ways to make the company's stock price go up so he will get a big raise for "good performance".

Re:

[Eunomion]

Tie everyone else's pay to the stock too. That solves both the definition problem and the accountability problem. And don't let them dilute anyone else's shares, or divert resources into a subsidiary they have more control over, or any other sociopath trick. Make it a fiducial breach to even try such a thing.

Re:

[rudy_wayne]

Tie everyone else's pay to the stock too. That solves both the definition problem and the accountability problem.

Wrong. Wrong. and Wrong.

In my previous job I worked for a company that was doing really well. They reported the highest quarterly profits in the company's history (they have been in business since the 1950s). The next quarter they reported even higher profits. The next quarter, even higher.

6 consecutive quarters of record profits .... and what happened to their stock price during all that? It went down 25%.

Why? The only answer I was able to get was "Wall Street doesn't like our CEO". Which

Re:

[Eunomion]

hey found that 80% of stock brokers will recommend (or not recommend) a stock based on what they think of the company's CEO.

That's a good point, I hadn't considered that. So instead of the stock, make everybody's pay based on profit. And make it the absolute dollar figure of profit, not the margin, so that management won't be tempted (as they are) to bankrupt the company chasing shiny objects.

Re:

[mspohr]

Yes, much executive pay is tied to stock price. That's why companies spend lots of effort to boost the stock price short term.
One of their favorite tools is the stock buyback. Instead of paying dividends to shareholder, companies use profits to buy their own stock which increases the stock price. Win for executives and investors (kindof) but loss for investing in the future of the company (i.e. R&D, market development).

Re:

[rudy_wayne]

And here is the root of the problem:

The shareholder resolutions and say-on-pay votes are nonbinding.

Then what is the point? The shareholders are supposed to be the actual "owners of the company".

Investors delivered a rebuke to Amazon in 2022 over its pay practices, only narrowly approving salaries amid concerns about big stock grants awarded to top executives ....The board conducted outreach with major investors following that vote but didn't adjust its plans

In other words, Amazon just said "Fuck you, we'll do whatever we want".

Re:

[alvinrod]

The alternatives are to pay out that money as dividends, which means it isn't being reinvested into R&D or otherwise growing the company, or to try spending it to expand the company, which may not pan out at all. The company having extra stock also means that they can offer more of it to new employees as a form of compensation.

I've never really understood the complaints about stock buybacks in the first place and the majority of the time I hear the argument it's being made as some admonishment of a c

Re:

[mspohr]

Stock buybacks made as open-market repurchases make no contribution to the productive capabilities of the firm. Indeed, these distributions to shareholders, which generally come on top of dividends, disrupt the growth dynamic that links the productivity and pay of the labor force. The results are increased income inequity, employment instability, and anemic productivity.
Buybacks enrich these opportunistic share sellers — investment bankers and hedge-fund managers as well as senior corporate executives

Re:

[dgatwood]

The alternatives are to pay out that money as dividends, which means it isn't being reinvested into R&D or otherwise growing the company, or to try spending it to expand the company, which may not pan out at all.

You missed an important one. You can save the money to make your company robust against economic downturns. Unfortunately, when the economic downturns actually happen, the companies usually choose to lay off workers and piss away the money on stock buybacks anyway, because driving the stock price up is better for the executives' pay. Executives have a perverse incentive to drive the stock price up, even if it is to the detriment of the company, and a golden parachute at the end, when they finally run it

Amazon cannot suffer unionism

[RussellTheMuscle]

A friend of mine (Amazon manager) is pressured to fire the bottom 10% of the team each year. My wife thinks that it is unreasonable, as do I, but I can understand that in a competition for world data domination, suffering slackers is a no go. I do not see how tech companies can be heartlessly cut-throat, and conform to collective bargaining demands at the same time. The future of employee/employer respect is playing out now, and it will be interesting to see who wins.

Re:Amazon cannot suffer unionism

[rudy_wayne]

I do not see how tech companies can be heartlessly cut-throat, and conform to collective bargaining demands at the same time.

They can't. That's why they are trying so hard to prevent employees from joining unions.

Re:

[TechyImmigrant]

>is pressured to fire the bottom 10% of the team each year.

This behaviour destroys effective teams. I've seen it in action.

A team of 10 higher performing engineers would never assemble, because 10% of them would be in the firing line. So mediocracy wins.

Re:

[Bodhammer]

I played this game at both Intel and GE. The companies called it "ranking and rating". We called it "Ratting and Raping". It was destructive, corrosive, and an overall miserable process for everyone involved. If you want proof of how well this works, look at the stock charts of the companies. And yes, I know they have both supposedly discontinued the practice but the echoes linger on...

Re:

[TechyImmigrant]

It was called "ranting and raving" in my domain.

I've seen recent layoffs be badly misdirected, basically punishing people for being too good and so making other people look bad. Our competitors scooped them up quickly.

I lay the blame squarely at over-hiring. Whenever a company is hiring at a prodigious rate, be afraid. Lay offs will follow.

Re:

[EmagGeek]

Even GE has backed away from the Jack Welch "fire the bottom 10% every year to motivate the rest" approach, where it originated.

Re:

[fropenn]

is pressured to fire the bottom 10% of the team each year

This is a common practice but it is so stupid and it actually undercuts the performance Amazon claims to desire.

Think about it. If you know 1 from your group of 10 will be fired, why would you help anyone else achieve their goals (even if it is good for the company)? Why would you share tips on how to do something more effectively, more efficiently, better? Why would you speak up about a situation that impacts other employees (but not you)? It will just make you look bad in comparison.

Instead, they need

Excessive Pay

[EmagGeek]

Mortimer: "We seem to be paying some of our employees an awful lot of money..."

Winthorpe: "You can't get around the old minimum wage, Mortimer."

Obligatory Shrek quote

[Locke2005]

"Do you think maybe he's compensating for something?"