Having faced shop floor labor rebellions at multiple warehouses this past year, Amazon is now confronting a new rebellion in the boardroom. Public pension-fund trustees in New York and Illinois are demanding that the company replace two members of its board of directors for failure to rein in skyrocketing injury rates among employees and massive employee turnover.
“The [Amazon] directors responsible for human capital management have utterly failed to do so,” says recently elected New York City Comptroller Brad Lander, who is leading the effort. “We have the belief that Amazon’s success depends on its 1.6 million workers. As we have heard from workers on the toll the company has taken on their lives and bodies, the company’s response is to union bust. We don’t think this is consistent with the long-term values we have.”
Five New York City pension funds, the New York State Common Retirement Fund, and the Illinois State Treasurer joined the initial launch of the effort. All are long-term Amazon shareholders, with 1.7 million in combined Amazon shares valued at approximately $5.3 billion.
They have launched a campaign website aimed at other institutional investors calling for a vote against the reelection of Daniel Huttenlocher and Judith McGrath. As the only long-term members of the Amazon Leadership Development and Compensation Committee overseeing human resources—the third committee member joined only last year—they are being targeted for years of voting to approve pay hikes for top managers while turning a blind eye to all the workplace violations. This campaign follows earlier demands by the New York City pension funds in 2020 that the Amazon board provide more leadership during the pandemic to protect the health and safety of its workers.
Taking on corporate boards is nothing new for the New York pension funds. Just last year, in a challenge to the company’s failure to address climate change, they joined other institutional investors in voting down three of the four Exxon board members running for reelection, as detailed in The Nation two weeks ago.
The Amazon campaign has already reached out to the same network of institutional investors. “It is hard to speak with Amazon employees and contractors and not believe that Amazon could unlock more value through better oversight of their human capital management,” says David Wallack, executive director at For the Long Term, where he works with state treasurers and comptrollers around the country. He has confidence that many pension funds will support Lander’s efforts challenging the reelection of the two Amazon directors.
Lander emphasizes that because of the size of its pension funds—roughly $600 billion between city and state—New York also has significant influence over private asset management companies. “State Street [owner of 3.4 percent of Amazon] is the custodian for our funds. Blackrock [owner of 3.6 percent] holds a number of our funds.” Given past corporate activism, the New York funds also have strong relationships with Glass Lewis and Institutional Shareholder Services, who are mainstream players in promoting better corporate governance and directing proxy guidelines during shareholder votes.
In making their case, the campaign cites studies that found Amazon warehouses had disproportionate rates of injury for workers. Amazon employs a third of US warehouse workers but accounts for nearly half (49 percent) of all injuries in the sector.
Its home state of Washington earlier this year issued a rare “willful severe” citation to Amazon with a $60,000 fine for knowingly putting workers at risk of serious injuries. The federal Occupational Safety and Health Agency is also investigating Amazon because six employees were killed at a distribution center in Illinois when their building was struck by a tornado after the company allegedly refused to evacuate workers despite tornado alerts. The campaign site also identifies the problem of Amazon’s using “strong-arm tactics that interfere with employees’ freedom of association,” as well as multiple charges of unfair labor practices leveled at the company by the National Labor Relations Board.
The other major complaint by the pension fund leaders is the high rate of employee turnover, with around 150 percent of Amazon workers quitting annually—which translates to 3 percent of company employees leaving every week. This is double the rate of similar businesses, so pension leaders are charging that this reflects poor management and oversight by the board of directors.
Most damning, reporters in a New York Times investigation found that, in contrast to its sophisticated technology processing packages, Amazon’s human resource systems were poorly designed, reflecting apathy by the company about retaining workers. Former executives at Amazon admitted how inadequate those human resources systems were, as well as the fact that company founder Jeff Bezos expressed active hostility to maintaining an “entrenched work force,” calling that a “march to mediocrity.”
“They may burn through all the available hirable workers in the country, which is a long-term danger,” argues Lander. “This vote is about having good independent oversight.” Making the case to other investors, Lander notes, “A company where workers are healthier and happier and stick-around is compatible with a more profitable Amazon for the long term.”