On Wednesday, Amazon (NASDAQ: AMZN) held its annual meeting for the first time under its new chief executive. The company faced 15 shareholder-backed proposals, more than ever before. Amazon’s opposition to all proposals was almost as predictable as their failure. Shareholders have a reason to be displeased with Amazon. The company’s stock has lost over $600 billion in market value over the past year due to a slowdown in e-commerce sales across the industry.
As a result, Amazon has been forced to balance slowing revenue growth with slumping earnings. Because of increasing pressures from Wall Street, the company expects to increase their sales by 12 percent this year, down from 28 percent in the previous five years, while operating earnings are expected to drop 21 percent this year, down from 57 percent in the previous five years.
There have been more than five shareholder activism campaigns in the past year that were not related to business issues. Amazon is a large target for those worried about the industry’s growing influence, as it is the largest of the big techs both by annual revenue and workforce size. With over one million fulfillment employees earning hourly wages, Amazon is also the only tech company among its peers with such a significant headcount. The growing effort to unionize Amazon’s fulfillment workforce has been the subject of five shareholder resolutions this year.
Large institutional investors usually back management in shareholder resolutions, which usually have poor chances of success. Amazon is one of many big techs that has become a target for activist investors. On Wednesday, Meta Platforms had 12 shareholder resolutions for its annual meeting compared to just six the previous year. Google-parent Alphabet will be confronted with 17 resolutions at its annual gathering next week, up from eight the previous year. According to Courteney Keatinge, shareholder advisory firm Glass Lewis’ Lead, Amazon, Meta, and Johnson & Johnson have the most shareholder proposals on their proxies this year; Johnson & Johnson comes in second with ten initiatives.
However, among its tech counterparties that seem to be similarly targeted, Amazon is in a more vulnerable situation. At the Facebook and Google parents, dual-class share structures prevent even the semblance of shareholder democracy. For a technological giant like Amazon, one key issue at this moment is rather ancient—too much space. At the meeting on Wednesday, Mr Jassy indicated that the company is taking actions like delaying construction on some properties and letting leases lapse on others to maximise capacity.
The macroeconomic pressures from inflation, interest rates, and the war in Ukraine have already hurt growth in the online advertising sector, and Amazon, Google, and Facebook are all feeling the pinch. As a result, Amazon, Alphabet, and META have dropped 36% in price this year, underperforming Apple and Microsoft and the tech sector as a whole. Investors have not been happy about the consequences; shareholders might be happier about what happens.
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