Amazon Refuses to Awaken its Board for Diverse Candidates
- Shareholders proposed to adopt the “Rooney Rule” for board member selection
- 5 companies in Q1 2018 added black executives to their boards
Employees at Amazon (AMZN -0.09%) are in their feelings after the company opposed a shareholder board diversity proposal. This would have required its directors to formally consider women and minority candidates when selecting new board members. Where does the true value lie for companies willing to to bring diversity of thought onto their boards?
Why This Matters: The business case for diversity has been made at nauseam with very little real change. Currently, all 10 directors on Amazon’s board are white, seven are men and three are women. Shareholders wanted the board to adopt the “Rooney Rule,” which calls for the initial list of candidates chosen to include qualified women and minorities, according to Recode. “The Board believes that adoption of the policy requested by the proposal would not be an effective and prudent use of the Company’s time and resources,” Amazon said in a proxy statement.
Amazon has proven it can dramatically reshape whole, seemingly disconnected industries, so board diversity should be easy to figure out. Research from McKinsey and MSCI shows companies with higher levels of diversity at the board level, are more likely to have strong financial performance and fewer instances of poor corporate governance. There are companies heeding this research because in Q1 of this year J.P. Morgan (JPM +0.04%), AirBnB, Uber, Netflix (NFLX +0.63%), and Etsy (ETSY -1.97%) all added African-American executives to their boards.
What’s Next: Prior to the shareholder vote deadline of May 25, Amazon’s board recommended a vote against the proposal. Look out to see if any new proposals around diversity spring up before the deadline.
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