Proxy Votes This Week at Amazon, Schwab, and Morgan Stanley

The busiest two weeks for proxy-voting season lands at the end of May, where you’ll find investors facing off on a host of themes, including facial recognition, workers’ rights, pay equity, and climate financing.

In the next several days, key proxy votes will take place at company annual meetings, including Amazon AMZN (May 22), Charles Schwab SCHW (May 23), and Morgan Stanley MS (May 23). The following week spotlights Meta FB (May 29), Exxon Mobil XOM (May 29), and Chevron (May 29). We’ll write about them in a separate story, using research from Morningstar Sustainalytics’ stewardship program voting service.

Amazon’s proxy reflects the range of investor concerns about environmental, social, and governance risk. You can see all 14 proposals and Amazon’s recommendations here. One investor wants Amazon to report on the risks associated with its Rekognition facial recognition technology to governments. The proposal claims the technology may violate civil rights by unfairly targeting people of color, immigrants, and civil society organizations. For example, the ACLU found Rekognition incorrectly identified 28 congressional members as having been arrested for a crime, and falsely matched 1 in 5 California lawmakers.

“There is little evidence [Amazon’s board], as part of its fiduciary oversight, has rigorously assessed risks to Amazon’s financial performance, reputation and shareholder value associated with privacy and human rights threats to all stakeholders,” according to the proposal. In 2023, a similar proposal received 37.4% of shareholder vote. Adjusted for Amazon founder Jeff Bezos’ 10% stake, that represents 45% of Amazon’s independent shareholders, writes Morningstar Sustainalytics analyst Ignacio Garcia Giner.

Another shareholder asks the online retailer to report on whether it follows its own declared commitment to workers’ freedom of association and collective bargaining rights. “Amazon has faced significant allegations of labor abuses across its global operations, including gender and racial discrimination, wrongful termination, wages disputes, harassment and retaliation claims, and anti-union practices, which have resulted in numerous lawsuits over the years,” writes Giner.

Indeed, a separate request centers on the working conditions for Amazon warehouse workers.

At the same time, Amazon says it’s committed to the International Labor Organization Declaration on Fundamental Principles and Rights at Work. “We believe it necessary for the company to subject its policies and practices through a third-party assessment and transparently disclose the results of the assessment,” Giner says.

Pay Equity

- Last year, shareholder resolutions received average support of 32%, according to Morningstar Sustainalytics. This year, a Charles Schwab investor proposes it report on racial and gender pay gaps in its work force, asserting that “actively managing pay equity is associated with improved representation, and diversity is linked to superior stock performance and return on equity.” According to the proposal, minorities represent 37% of Charles Schwab’s workforce and 27% of management. Women represent 37% of the workforce and 37% of management. A similar resolution filed at Schwab’s 2023 annual meeting received 27% support from independent shareholders.

Schwab has said it’s committed to closing pay gaps. “However, the company does not commit to disclosing median pay gaps on an unadjusted basis. The company has also not disclosed whether it has set targets to increase representation in the short, medium and long-term … The requested reporting would strengthen the company’s DEI strategy and help assist with its near-term representation and pay parity commitments,” writes Giner.

Banking on the Carbon Transition

- Investors are looking for better details around bank exposure to the climate transition. Thus, New York City Comptroller Brad Lander, on behalf of a number of NYC pension funds, asks Morgan Stanley to disclose a metric it calls the Clean Energy Supply Financing Ratio. The ratio looks at the bank’s clean energy financing as a proportion of its fossil fuel financing. (That includes equity and debt underwriting and project finance.) It should also define what the bank considers low carbon and fossil fuel. You can read the proposal here.

New York City approached a number of other banks, and JPMorgan Chase JPM, Citigroup C, and Royal Bank of Canada RY agreed to its asks.

Writes Jekaterina Spiridonova of Morningstar Sustainalytics: “The requested disclosure can enhance shareholders’ understanding of the bank’s progress in achieving its net zero goals by highlighting the proportion of the bank’s financing still directed toward fossil fuel energy supply, while also providing a more standardized metric for comparing progress among banks.”

Recent Proxy-Voting Season Highlights

Analysts believe proxy-voting support above 25% catches the board’s attention. Following is a list of recent, attention-getting proxy votes.

- At DraftKings DKNG, 3.7% of shareholders asked the sports-betting company to report on its political spending. That represented 59.1% of independent shareholders, according to Morningstar Sustainalytics.

- At Amkor Technology AMKR, 20.6% of investors endorsed commissioning a report on the effectiveness of the chip-testing company’s diversity, equity, and inclusion efforts. That represented 49.1% of independent shareholders.

- At Dine Brands Global DIN, 40.3% of shareholders asked the owner of Applebee’s and International House of Pancakes restaurants to explain its governance around climate change policies and adopt targets for reducing emissions.

- At Boeing BA, 38.8% of investors endorsed reporting on pay gaps across race and gender.

- At Alcoa AA, 36.2% of shareholders supported a proposal for the aluminum company to report on its lobbying practices.

- At Centene CNC, 36.1% of shareholders asked the managed care company to issue near- and long-term greenhouse gas reduction targets.

- At Noodles & Co. 27.9% of investors wanted the company to disclose its current greenhouse gas emissions and publish targets to reduce them. That represented 35.7% of independent shareholders.