Amazon.com has filed requests seeking the SEC’s green light to exclude 12 shareholder proposals from its 2022 proxy statement, including one on ‘concealment clauses’ in employment contracts. The SEC is yet to make a public decision on the requests.
Amazon has not yet filed its proxy statement for 2022 but its 2021 AGM took place on May 26. A company spokesperson had no comment beyond Amazon's filings.
One of the proposals at issue requests that Amazon’s board ‘prepare a public report assessing the potential risks to the company associated with its use of concealment clauses in the context of harassment, discrimination and other unlawful acts.’
The proposal’s supporting statement defines concealment clauses as ‘any employment or post-employment agreement, such as arbitration, non-disclosure or non-disparagement agreements, that Amazon asks employees or contractors to sign [that] would limit their ability to discuss unlawful acts in the workplace, including harassment and discrimination.’
Whistle Stop Capital, which filed the proposal, states: ‘Amazon wisely uses concealment clauses in employment agreements to protect corporate information such as trade secrets. [But] harassment and discrimination are not trade secrets, nor are they core to Amazon’s operations or needed for competitive reasons. Yet Amazon’s employment agreements may prohibit their workers from speaking openly on these topics. Given this, investors cannot be confident in their knowledge of Amazon’s workplace culture.’
Amazon has requested that the SEC provide no-action relief if it excludes the proposal pursuant to Rule 14a-8(i)(10), on the grounds that the company has ‘substantially implemented’ it.
‘[T]he company provides an equal opportunity in all aspects of employment and will not tolerate any illegal discrimination or harassment of any kind. The company works hard to foster a work environment in which all employees are empowered to do their best work, free of discrimination, harassment or other unlawful conduct,’ Amazon states in its request.
The company says it has published a report on its website addressing the topics in the proposal. The report, it says, discusses the company’s use of what it calls ‘confidentiality clauses’ – rather than ‘concealment clauses’ – and assesses the potential risks associated with its ‘limited use’ of such provisions.
It adds that these include the risk that ‘the company’s use of confidentiality clauses, though limited, may be perceived to have the effect of reducing accountability, [t]he risk that the company’s use of confidentiality clauses could result in investors or others lacking confidence about their ability to understand the company’s workplace culture, and [t]he risk that stakeholders, including employees and customers, may not understand how such provisions operate or that the company’s use of such provisions is limited.’
According to the company’s request, the report acknowledges that any such misperceptions could affect Amazon’s ability to attract and retain talented employees but that these risks are mitigated by policies and practices that it details.
Apple shareholders are due to vote next month on another concealment clause proposal. Apple unsuccessfully sought no-action relief for omitting that proposal, which was filed by Nia Impact Capital, arguing that it has been substantially implemented and relates to the company’s ‘ordinary business operations.’
‘Apple is deeply committed to creating and maintaining a positive and inclusive workplace,’ the company argued. ‘Apple does not limit employees’ and contractors’ ability to speak freely about harassment, discrimination and other unlawful acts in the workplace. Instead, Apple supports the rights of its employees and contractors to speak freely about these matters, and it is the company’s policy that employees and contractors should not be prohibited from doing so.’
It stated in its request that Apple has substantially implemented the aims of the proposal – to disclose the risks of its use of concealment clauses – because its policy is not to use them, which it says is communicated in its publicly available business conduct policy. Apple added that the proposal relates to the company’s management of its workforce, specifically the details of its contractual arrangements with employees, former employees and contractors.
The SEC did not agree, writing that the proposal ‘transcends ordinary business matters and does not seek to micromanage the company’ and that ‘it appears that the company’s policies, practices and procedures do not compare favorably with the guidelines of the proposal and that the company has not, therefore, substantially implemented the proposal.’
A request for comment from Apple was not returned at the time of the original article.