In the wake of sexual harassment allegations against a now former Amazon executive, a group that advocates for investors sent a letter last week to the online giant, urging it to improve the diversity of its senior executive ranks, among other things. The letter is the second filed by CtW Investment Group, which works with union-sponsored pension funds, and is a sign that some investors are growing concerned about the reputation hit companies could face from the recent flood of harassment headlines.
“We believe that the evidence suggests that Amazon’s gender diversity gap creates significant risks for long-term shareholders, and that further delays in rethinking Amazon’s approach to human capital management may have dire consequences,” the organization’s executive director, Dieter Waizenegger, said in the letter, which is addressed to Amazon chairman and chief executive Jeffrey P. Bezos. (Bezos owns The Washington Post.)
The letter also cites the perception of Amazon as “an excessively high-pressure workplace” and calls for the board to take a number of steps, from setting targets for gender diversity to having a labor-law expert review employment contracts. CtW, which says the pension funds it works with hold about 1 million Amazon shares, or 0.2 percent, also plans to submit a shareholder resolution. It is not clear whether the proposal would become part of Amazon’s next proxy statement, which is required of a firm when soliciting shareholder votes. Companies can request that the U.S. Securities and Exchange Commission let them exclude proposals if they pertain to “ordinary business operations."
Richard Clayton, CtW’s research director, said that one of the company’s concerns with Amazon was the time lag between 2015 — when producer Isa Hackett said she made complaints to the company about behavior by former executive Roy Price — and this October, when Price resigned from Amazon after being suspended by the company. “Why was there was a two-year delay?” Clayton said. “We’d want to hear the board explain why that happened.” (An email to a lawyer who is reported to represent Price was not immediately returned.)
The letter also cites the number of women Amazon has in senior executive roles, compared with other tech companies, and asserts that could have an impact on how the company addresses allegations. It cited numbers from a recent New York Times story, which reported that just one of the top 16 executives (6 percent) at Amazon, known as the “S-team,” is a woman. At Apple, five of the top 19 executives listed on its website (26 percent) are women. Six of the 13 people (46 percent) on Google chief executive Sundar Pichai’s team are women, and three of the 16 executives listed on Microsoft’s website (19 percent) are female.
An Amazon spokesman declined to comment on the letter. In a statement previously reported by the Hollywood Reporter, where Hackett described her allegations, an Amazon spokesperson said “we take seriously any questions about the conduct of our employees,” and “we expect people to set high standards for themselves; we encourage people to raise any concerns and we make it a priority to investigate and address them.”
A recent report on the technology site Recode about the few women at the top of Amazon included a statement from a company diversity director, saying Amazon was “focused on retaining and developing diverse talent internally through training and leadership opportunities” and it was “seeking to recruit more diverse leaders across the company.”
Women run several of Amazon’s businesses or divisions, including Stephenie Landry at Prime Now, Jennifer Cast at Amazon Books and Elaine Chang, Amazon’s leader in China. But these women are not part of the S-team, which has been described as the core group of senior executives that leads the company. In the company’s public diversity report, Amazon says 25 percent of managers are women on a global level.
More than two years ago, Amazon’s culture was the subject of a lengthy report in the New York Times that depicted the workplace as hard-charging and “bruising,” prompting pushback from the company. In his own memo to employees, Bezos wrote at the time that “the article doesn’t describe the Amazon I know or the caring Amazonians I work with every day,” and called on employees to bring any stories to human resources or email him directly. “Even if it’s rare or isolated, our tolerance for any such lack of empathy needs to be zero.”
Earlier this year, on a list of employers compiled by LinkedIn based on employee retention and user interest in a company’s job, brand and employees, Amazon came in second behind Alphabet, Google’s parent company.
In its letter, CtW urged the board to “promptly commit” to greater diversity among senior executives, setting specific targets for how many senior women it would add. It also asks Amazon to create a “Stakeholder Advisory Council” that would meet on sustainability issues including sexual harassment, have a labor-law expert review employment agreements, and give more independence and authority to the company’s nine “affinity groups” — networks of employees such as women in engineering or LGBTQ workers.
It also asks that the company aim for gender parity on its board — a rare feat in corporate America. While Amazon has a greater percentage of women on the board than Apple, Facebook or Alphabet (three of Amazon’s 10 directors, or 30 percent, are women), CtW suggests adding more women would “significantly enhance the credibility of Amazon’s commitment.”
CtW’s letter to Amazon is the second it has sent as sexual harassment headlines have piled up against powerful figures in media and business, and Clayton said it is “actively considering” sending letters to other companies, though nothing is definitive yet. Following the sexual harassment scandal at Fox News, CtW sent an October letter to 21st Century Fox, charging that the board failed to “effectively address the longtime ethics crisis” and pressing it to refresh its lineup of directors.
In a response to CtW, the media giant said in a letter that the company “has acted swiftly and decisively to address workplace civility matters at Fox News,” including installing new leadership and new human resources executives, changing the reporting structure and adding an enhanced training program for 7,000 employees.
So far, investors have not been pushing many proxy resolutions focused on corporate harassment policies, and it’s not expected to be a big factor during next year’s annual meeting season, according to the research arm of proxy adviser Institutional Shareholder Services. But that doesn’t mean investors aren’t concerned about issues related to gender. Proposals on gender diversity on the board, more broadly, have been growing in recent years, from just seven in 2012 to 37 this year.
ISS is sending an email campaign to clients this week promoting a database that scans media reports, court records and Equal Employment Opportunity Commission filings for sexual harassment controversies, suggesting there is a market for investors’ concerns. Data from the company’s responsible investing arm, ISS-Ethix, show that there have been 55 reported sexual harassment controversies affecting companies in the S&P 500 this year, up from 27 last year and 16 in 2012, the first year it began tracking the data.
Meanwhile, Eve Ellis, a financial adviser at Morgan Stanley who co-manages a portfolio that examines board diversity when selecting investments, said in an email that investors she talks with “are becoming increasingly aware of the negative impact sexual harassment charges can have on a firm’s performance,” and she watches for signs her investments are with companies that have policies in place.
Others believe shareholders could become more active on the topic. 21st Century Fox reached a settlement with a pension fund in Michigan that includes establishing a “Workplace Professionalism and Inclusion Council” and a $90 million payment made to the company from outside insurers (minus fees). In a statement, 21st Century Fox said the council would provide public written reports posted to its website and report directly to the board. The council will include four independent members who it looks “forward to benefiting from their collective guidance,” said Jack Abernethy, Fox News Channel’s co-president, in the statement.
There is not much question, said Max Berger, a lawyer who represented the Michigan municipal pension fund in that case, that “there will be a robust increase in shareholder activism around the claims of harassment and discrimination at public companies.”
“It seems to be we’ve opened up Pandora’s box.”