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Amazon Shareholders Should Reject CEO Pay Package, Advisers Say

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(Bloomberg) -- Amazon.com Inc. shareholders should vote to reject the pay packages of Chief Executive Officer Andy Jassy and other top leaders, two influential investor advisory firms recommended, citing massive stock grants executives are set to receive regardless of how well the company performs in the coming years.

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Shareholders later this month will have an opportunity to express their views on how the e-commerce giant compensates its recently reshuffled executive ranks. Institutional Shareholder Services Inc. and Glass Lewis & Co., which advise investors on corporate governance issues, both recommend shareholders vote no in the non-binding vote.

While it’s rare for the two firms to suggest rejecting executive pay packages, both recently recommended voting against them at Bayer AG and Discovery Inc.

Jassy, who took the reins from founding CEO Jeff Bezos in July, was awarded a pay package valued at about $212 million in 2021, the company said, almost entirely in stock grants that vest over 10 years.

Adam Selipsky, who succeeded Jassy as head of the Amazon Web Services cloud computing unit, received about $81 million, mostly in a five-year stock grant. Dave Clark, who early last year took charge of Amazon’s retail and logistics business, was paid $56 million.

Jassy’s pay package “is excessive in the context of an internal promotion,” ISS said in a report, published to clients on Wednesday. “The compensation program lacks any connection to objective, pre-set performance criteria.” In its own report last week, Glass Lewis said: “Shareholders should be concerned with this year’s disconnect between pay and performance driven by one-off awards.”

In an emailed statement on Thursday, Amazon noted that Jassy received the shares grant last year when he transitioned from AWS chief to CEO of the entire company.

“The way the SEC rules work we are required to report that grant as total compensation for 2021, when in reality it will vest over the next 10 years,” Amazon said. “What this equates to from an annual compensation perspective is competitive with that of CEOs at other large companies and was approved by the Amazon Board of Directors.”

Amazon says in its own recommendation to shareholders that the company’s compensation philosophy “focuses on the true long-term success of our business, not on isolated one, two or three-year goals.” More than 80% of Jassy’s shares vest after 2026, and the award is expected to “represent most of his compensation for the coming years,” the company said.

Both ISS and Glass Lewis deemed the statement vague and non-binding and noted that Jassy could receive more stock in the coming years.

Critics Forum

Amazon’s annual meeting, scheduled for May 25, has for years been a forum for company critics to voice their concerns before executives. This year’s shareholder-proposed resolutions include requests that Amazon consider hourly employees for future openings on its board and that the company produce reports on worker safety, the environment and employee policies, among other topics.

Those measures are typically overwhelmingly voted down. But this year, ISS and Glass Lewis backed several of them, including a request that Amazon detail its policies on employees’ freedom of association and collective bargaining. Unions and federal labor officials have accused the company of illegally firing employees involved in union drives at its warehouses. Amazon denies that.

The New York City Comptroller has asked fellow investors to vote against the reelection of Amazon directors Daniel Huttenlocher and Judith McGrath, dinging the members of the board’s compensation and leadership committee for higher-than-average injury rates among frontline workers, violations of state and federal labor law and a high turnover rate.

Amazon’s own guidance to shareholders recommends electing both directors, touting Amazon’s $18 an hour starting wage in the US and a safety report showing a decrease in lost time to injuries, among other initiatives.

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