After facing public backlash for initially defending its “complex” meritocratic system, Amazon said on Monday it’s implementing a racial diversity rule a left-wing, billion-dollar “activist” investment group pushed on the tech giant.
“The Amazon Board of Directors has adopted a policy that the Nominating and Corporate Governance Committee include a slate of diverse candidates, including women and minorities, for all director openings,” Amazon said in its Securities and Exchange Commission (SEC) filing.
Amazon is now applying the “Rooney Rule” to its board of directors hiring process. It first required NFL teams to interview at least one racial minority for head coach and senior football operation positions but is now applied in other industries.
The racial diversity rule request came from Amazon shareholders CtW Investment Group and Master Trust of the Service Employees International Union.
CtW Investment Group was described as “an activist shareholder group” by Stefanie Johnsonan, an associate professor at the University of Colorado’s Leeds School of Business, in the Harvard Business Review.
The group owns more than $200 billion in assets and is funded by multiple union pension funds affiliated with Change to Win, a liberal coalition of unions, according to CtW’s “About Us” section on its website.
Also in CtW’s “About Us” section is a disclaimer it “does not exercise or seek to exercise any discretionary authority or discretionary control regarding management of any plan, disposition of any plan assets, proxy voting decisions, appointment of plan trustees, or any other aspect of plan management or administration.”
While Amazon’s board “agrees strongly with increasing board diversity and is actively seeking racially diverse and female candidates who would be outstanding additions to our board,” it initially opposed the policy, Recode reported on May 8.
“Our processes for nominating directors involve complex considerations that are designed to advance the long-term interests of shareholders,” Amazon said on April 19 in its SEC filing.
“Given our commitment to equality and the nature of our business, the board believes that adoption of the [Rooney Rule] policy requested by the proposal would not be an effective and prudent use of the company’s time and resources,” the company added.
Some Amazon employees were outraged at the board’s decision. “We don’t need more effort; we need COURAGE,” one female employee said.
Angry black and Hispanic Democrats wrote a letter to Amazon CEO Jeff Bezos, saying Amazon’s initial decision not to implement the racial diversity rule was “astounding.”
“Our astonishment is compounded when you consider the fact that your ‘customer-centric’ company — with over 300 million active users — has zero people of color on your 10-person Board of Directors,” the Democrats wrote May 11.
Amazon quickly flipped and said it would implement the Rooney Rule three days after the Democrats’ letter.
“We reached this decision after listening to your feedback as well as that from Amazon employees, shareholders, and other stakeholders about the Board diversity proposal,” said Brian Huseman, vice president of public policy at Amazon.
Amazon’s board currently has a diverse background of members including a former Apple executive, a former U.S. attorney, a former Xerox chief scientist, the dean and vice provost of Cornell Tech, and others.
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