Amazon Company’s Executives and Shareholders Report

Exclusively available on Available only on IvyPanda® • No AI

Amazon’s board of directors is not entirely independent from the management due to the fact that Jeff Bezos, who serves as the Chairman of the Board, also happens to be the CEO of the company. In 2018, more than a quarter of the shareholders voted for replacing him with an independent chairman (Sum Of Us, 2018). However, as of today, Bezos retains both positions despite the conflict of interest.

Amazon executives share a significant amount of experience between them and, most importantly, have been working at the company for a long time with very few exceptions. For example, Brian Olsavsky, who holds the key position of Chief Financial Officer, joined the company in 2002 and held various roles before he was appointed Senior Vice President (Officers and Directors, n.d.). Several executives have been working at Amazon for more than 20 years (Officers and Directors, n.d.). Some of the newer members of the top management have gained vast experience working for other companies and the US government. The notable examples include Dave Treadwell, who worked for Microsoft for 27 years, and Jay Carney, who served as the White House press secretary under Barack Obama (Bishop, 2016; Kim, 2019). Overall, Amazon’s management team is among the most experienced in the US.

Salaries of Amazon executives are often lower than in competing companies. Jeff Bezos’ salary has remained stable at $81,840 for many years (Levy, 2017). However, Bezos has been one of the wealthiest people in the world for the past few years, thanks to his stake in Amazon. Other executives’ overall compensation significantly benefits from their share in the company as well. For example, in 2016, Jeffrey Wilke made almost $33 million, and Jeffrey Blackburn earned $22,2 million (Levy, 2017).

Overall, Amazon prioritizes stock-based compensation for employees at all levels (Levy, 2017). Hence, while executives’ salaries might seem not on par with the competition, the compensation package is very lucrative, especially considering the dynamics of Amazon’s share price. Moreover, this policy helps to prevent managerial entrenchment, as the compensations of the executives depend on the company’s performance on the stock market.

The control over Amazon shares is not as tight as in many competing companies. Insiders own less than 17% of the stock, and Jeff Bezos has been continuously reducing his stake during the past few years (Amazon: control freak, 2016; U.S. Securities and Exchange Commission, 2018). Amazon has a “one share, one vote” policy, meaning that Bezos does not have majority voting rights, unlike the founders of Facebook and Google (Amazon: control freak., 2016). However, his stake’s value still represents a serious obstacle for a potential takeover (Amazon: control freak, 2016). Moreover, Jeff Bezos has proven to be one of the most efficient CEOs of the last decade, making his authority extremely difficult to challenge.

Institutional investors own the majority of Amazon’s outstanding shares. As of December 2020, they hold ownership of 58.29% of the stock, with the Vanguard Group being the biggest stockholder (CNN Business, n.d.). Proxy fights and large-scale sale of shares are some of the potential disadvantages associated with high institutional ownership. However, it might be less of a problem in Amazon’s case, considering that not a single institutional investor owns more than 7% of the stock.

Throughout the past few years, Amazon has been subject to several challenges by activist shareholders. Besides trying to replace Bezos as the Chairman of the Board, activists submitted several resolutions on equity, environment, and lobbying issues. In 2019, activists forced the company to pledge to a significant reduction in fossil fuels use. (Romano, 2020). However, in 2020, none of the shareholders’ resolutions passed. Hence, the influence of activist groups on the company policies remains limited.