An in­vest­ment group

Call for gender par­ity in se­nior roles comes amid ha­rass­ment al­le­ga­tions

The Washington Post - - FRONT PAGE - BY JENA MCGRE­GOR jena.mcgre­gor@wash­post.com

urged Ama­zon to add more women to se­nior ex­ec­u­tive ranks fol­low­ing sex­ual ha­rass­ment al­le­ga­tions.

In the wake of sex­ual ha­rass­ment al­le­ga­tions against a now­former 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 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, such as set­ting tar­gets for gender diver­sity and 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 of its out­stand­ing shares, 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 Se­cu­ri­ties and Ex­change Com­mis­sion al­low them to ex­clude pro­pos­als if they per­tain to “or­di­nary busi­ness op­er­a­tions.”

Richard Clay­ton, CtW’s re­search di­rec­tor, said 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 Ama­zon Stu­dios ex­ec­u­tive Roy Price — and this Oc­to­ber, when Price re­signed from Ama­zon af­ter be­ing sus­pended by the com­pany.

“Why was there 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 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 “Steam,” 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 spokesman said: “We take se­ri­ously any ques­tions about the con­duct of our em­ploy­ees. 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 by the tech­nol­ogy site Re­code about the lack of women at the top of Ama­zon in­cluded a state­ment from a com­pany diver­sity di­rec­tor, say­ing Ama­zon was “seek­ing to re­cruit more di­verse lead­ers across the com­pany.”

Women run sev­eral of Ama­zon’s 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 a memo to em­ploy­ees at the time, Bezos wrote that “the ar­ti­cle doesn’t de­scribe the Ama­zon I know” 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,” he wrote.

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 LGBT work­ers.

It 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 (three of Ama­zon’s 10 di­rec­tors, or 30 per­cent, are women) than Ap­ple (24 per­cent), Face­book (25 per­cent) or Al­pha­bet (25 per­cent), 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. Fol­low­ing the sex­ual ha­rass­ment scan­dal at Fox News, CtW sent a let­ter to 21st

“We be­lieve . . . 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.” CtW in a let­ter to Ama­zon

Cen­tury Fox in Oc­to­ber, charg­ing that the board failed to “ef­fec­tively ad­dress the long­time ethics crisis.”

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 hu­man re­sources ex­ec­u­tives, chang­ing the re­port­ing structure and adding an en­hanced train­ing pro­gram for 7,000 em­ploy­ees.

Proxy ad­viser In­sti­tu­tional Share­holder Ser­vices 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. Data from the com­pany’s re­spon­si­ble in­vest­ing arm, ISS-Ethix, show 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 year it be­gan track­ing the data.

Some say 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).

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.”

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