Proxy Blog, Inc. 

May 8, 2019

The annual proxy for this electronic commerce and cloud computing company had the following proposals: 

  1. Proforma votes on directors, appointment of auditors, and “say-on-pay” advisory vote 
  2. Shareholder proposals on food waste, threshold for special meetings, government use of technology, independent board chair, employment practices, climate change, ideological disclosure, gender pay, integrating metrics into compensation, and vote-counting practices 

Magni voted as follows: 

  1. Magni voted for and against proforma proposals.
    -For directors  The board has a majority of independent directors and some have CEO/CFO experience with other companies. The board receives very little compensation and that is unusual, however the unusual compensation plan is acceptable from a governance perspective.
    -For auditors – There appear to be no controversies with the financial statements of the company.
    -Against say-on-pay”  The company does not appear to have a shareholder engagement program and does not list a peer group 
  2. Magni voted for and against shareholder proposals.
    -For report on food waste – Food waste is a big issue. With the acquisition of Whole Foods, the importance of food waste should have risen to a strategic issue for the company. The proposal requests reporting. The company claims to be doing enough and provided evidence to that effect through a listing of ad hoc programs. It is not clear whether the leadership believes food waste to be important. A vote in favor of the proposal will help elevate the priority of addressing food waste.
    -For lowering threshold for special meetings to 20% – Good governance means open communications with shareholders.
    -Against three proposals related to government use of technology – These proposals are mainly about the facial recognition technology sold by Amazon to the government. The technology is amoral. It can be used for good or bad applications. The government’s use of facial recognition should be addressed at the political level and not the vendor level.
    -For independent chairman – An independent board is an important part of good governance. An independent chairman is an element of an independent board, though there are situations where an independent chairman does not make sense (e.g., a visionary founder where a material portion of the company value is connected to the founder). Earlier in the company’s history, such a situation probably did exist. The company is sufficiently large and mature that the roles should be separated.
    -For employment practices – This proposal has a series of recommendations related to reporting on and investigation of sexual harassment. Given that the company has had some issues with sexual harassment, the company should pay greater attention to this issue.
    -For climate change – Similar to the food waste proposal, the company’s response does not indicate that the board takes the issue sufficiently seriously.
    -Against ideological disclosure – The proposal wants disclosure of political affiliation of board members. When company gets politically active, the current polarization in this country can cause the value of the company to suffer. The shareholder behind the proposal seems to be targeting the founder and CEO’s ownership of the Washington PostProposals should be about the company and not about the founder’s other activities.
    -Against gender pay – Gender equity is an important issue. That said, there are two reasons for voting against the proposal. The first is the use of generic and inaccurate information in the shareholder’s supporting statement, along with the proposal requiring the company to report a misleading metric for gender equity. The second is the company’s prior and current efforts to address gender inclusion. The company has made good progress and should be encouraged to continue with its current efforts.
    -Against integrating metrics into compensation  This proposal wants specific metrics to be included in the compensation of top executives. While the shareholders should have input into the governance, process, and level of compensation for top executives, the structure of compensation is a board issue.
    -For vote-counting practices  A similar proposal was submitted last year. At the time, Magni voted against it as the supporting statement was not persuasive. This year’s proposal is clearer with a more persuasive supporting statement. The decision on how to vote is not easy. Both sides of the issue have merit. Given the large number of controversies related to the company and the significant ownership stake of the founder, Magni voted in favor of the proposal as a way to give smaller shareholders a larger voice.