Amazon.com, Inc.; Rule 14a-8 no-action letter

[Pages:21]GIBSON DUNN

January 25, 2021

Gibson, Dunn & Crutcher LLP

1050 Connectic ut Avenue, N.W. Wash ington, DC 20036-5306 Tel 202.955.8500 gibsondu nn. com

Ronald O. Mueller Direct: +1 202.955.8671 Fax: +1 202.530.9569 RMueller@

VIA E-MAIL

Office of Chief Counsel Division of Corporation Finance Securities and Exchange Commission 100 F Street, N.E. Washington, D.C. 20549

Re: , Inc. Shareholder Proposal of the AFL-CIO Reserve Fund Securities Exchange Act of 1934--Rule 14a-8

Ladies and Gentlemen:

This letter is to inform you that our client, , Inc. (the "Company"), intends to omit from its proxy statement and form of proxy for its 2021 Annual Meeting of Shareholders (collectively, the "2021 Proxy Materials") a shareholder proposal (the "Proposal") and statements in support thereof (the "Supporting Statement") received from the AFL-CIO Reserve Fund (the "Proponent").

Pursuant to Rule 14a-8(j), we have:

? filed this letter with the Securities and Exchange Commission (the "Commission") no later than eighty (80) calendar days before the Company intends to file its definitive 2021 Proxy Materials with the Commission; and

? concurrently sent copies of this correspondence to the Proponent.

Rule 14a-8(k) and Staff Legal Bulletin No. 14D (Nov. 7, 2008) ("SLB 14D") provide that shareholder proponents are required to send companies a copy of any correspondence that the proponents elect to submit to the Commission or the staff of the Division of Corporation Finance (the "Staff"). Accordingly, we are taking this opportunity to inform the Proponent that if the Proponent elects to submit additional correspondence to the Commission or the Staff with respect to the Proposal, a copy of that correspondence should be furnished concurrently to the undersigned on behalf of the Company pursuant to Rule 14a-8(k) and SLB 14D.

Beijing ? Bru sse ls ? Century City? Dallas? Denver? Dubai? Frankfurt? Hong Kong? Houston? London ? Los Ange les ? Munich New York? Orange County? Palo Alto? Paris ? Sa n Francisco ? Sao Paul o ? Sin gapore ? Was hington, D.C.

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The Proposal states:

THE PROPOSAL

Resolved: Shareholders request that the Board of Directors of Inc. (the "Company") adopt a policy for improving workforce diversity by requiring that the initial pool of candidates from which new employees are hired by the Company shall include, but need not be limited to, qualified women and minority candidates (a "Diverse Candidate Search Policy").

A copy of the Proposal, as well as related correspondence with the Proponent, is attached to this letter as Exhibit A.

BASES FOR EXCLUSION

The Company fully supports the objective of this Proposal, which is to improve workforce diversity, and as discussed below and on the Company's website, the Company has many programs in place across its worldwide operations that are designed to achieve that objective. Moreover, the Company's leadership has indicated its commitment to advancing diversity, equity, and inclusion as well as fostering a Company culture that values and respects diversity and inclusion within the Company, and thus the Company has put into place many policies and programs that fully align with the objective of the Proposal. Accordingly, we respectfully request that the Staff concur in our view that the Proposal may properly be excluded from the 2021 Proxy Materials pursuant to Rule 14a-8(i)(10) because the Company has substantially implemented the Proposal.

In addition, because the Proposal is focused on the hiring process, addressing how the Company "widens the talent pool" from which it recruits, the Proposal falls within the scope of the Commission's long-standing position relating to ordinary business operations (management of a company's workforce). As well, the Proposal seeks to micromanage the Company's diversity recruiting processes across a huge range of circumstances, many of which are more effectively handled through the Company's existing workplace diversity programs. Accordingly, we believe that the Proposal may be excluded from the 2021 Proxy Materials pursuant to Rule 14a-8(i)(7) since it addresses the Company's ordinary business operations and micromanages the Company by seeking to impose specific methods for implementing complex policies.

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BACKGROUND

Diversity, equity, and inclusion are enduring values for the Company, which takes very seriously its commitment to diversity and respect for people from all backgrounds, including gender, race, ethnicity, religion, sexual orientation, veteran status, and disability. This Company-wide commitment to diversity and inclusion in hiring and in the workplace is reflected in the Company's policies1 and its position statements.2

Given the size, scope, and diversity of its operations, the Company's businesses utilize numerous programs that focus on recruiting women and underrepresented racial/ethnic minorities to advance and implement the Company's diverse hiring commitment. As a result, each of the Company's businesses have diverse recruiting strategies whereby they engage in targeted outreach to women, underrepresented minorities, and other groups to encourage them to apply for jobs at the Company. For example, the Company participates in events and partnerships with groups like , GEM Consortium Fellows, AfroTech, Lesbians Who Tech, Girls in Tech, and the American Indian Science and Engineering Society, and the Company is collaborating with Management Leadership for Tomorrow ("MLT"), which partners with more than 150 leading companies, social sector organizations, and universities to strengthen recruitment and retention of Black, Latinx, and Native American talent. The Company is one of twelve launch employers participating in the MLT Black Equity at Work Certification Program, which is a clear and comprehensive standard that requires employers to make meaningful progress toward achieving Black equity internally while supporting Black equity in society.3 Other examples of the Company's efforts to recruit women and underrepresented racial/ethnic minority talent include recruiting from diverse colleges and universities (including Historically Black Colleges and Universities ("HBCUs"), Hispanic Serving Institutions, women's colleges,

1 See, e.g., Code of Business Conduct and Ethics, available at (" provides equal opportunity in all aspects of employment and will not tolerate any illegal discrimination or harassment of any kind. For more information, see the policies on Equal Employment Opportunity and Workplace Harassment in the Owner's Manual"); Amazon Global Human Right Principles, available at ("As outlined in our Code of Business Conduct and Ethics, we do not tolerate discrimination").

2 See ("Diversity and inclusion are good for business-- and more fundamentally--simply right").

3 See .

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and tribal colleges), hosting hiring fairs within underrepresented communities around the world, and committing to the HBCU Partnership Challenge to support greater engagement between private companies and HBCUs.

Throughout 2020, the Company also hosted several hiring fairs and career enrichment summits to partner with underrepresented communities around the world. These included Amazon Career Day in September 2020, a virtual event with over 300,000 attendees that was designed to help people--regardless of their level of experience, professional field, or background--find new opportunities either at the Company or another company, and the Represent the Future, Success is Inclusive Summit in October 2020, a virtual career enrichment experience designed to uplift Black, Latinx, and Native American professionals of all backgrounds and experience levels. The Company's diversity and inclusion website4 and sustainability report5 provide other examples of the many proactive recruitment and hiring practices taken to promote gender and racial diversity and inclusion in the Company's workforce.

To oversee and support its workplace diversity and inclusion commitment, the Company has a full-time director of inclusion, diversity, and equity who reports directly to the chief human resources officer and a staff of hundreds of professionals in the Company's central diversity, equity, and inclusion organization and in teams embedded in the Company's businesses who are devoted full-time to promoting diversity, equity, and inclusion goals, initiatives, and mechanisms.

These programs and personnel operate to implement the Company's company-wide diversity and inclusion commitment. For example, in 2020, the Company set and achieved a goal to double the number of Black directors and vice presidents at the Company, and the Company is committed to doubling representation again in 2021.

4 See .

5 See All In: Staying the Course on Our Commitment to Sustainability, available at .

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ANALYSIS

I. The Proposal May Be Excluded Under Rule 14a-8(i)(10) Because The Company Has Substantially Implemented The Proposal.

A. The Substantial Implementation Standard.

Rule 14a-8(i)(10) permits a company to exclude a shareholder proposal from its proxy materials if the company has "substantially implemented" the proposal. The Commission stated in 1976 that the predecessor to Rule 14a-8(i)(10) was "designed to avoid the possibility of shareholders having to consider matters which already have been favorably acted upon by the management." Exchange Act Release No. 12598 (July 7, 1976) ("1976 Release"). Originally, the Staff narrowly interpreted this predecessor rule and concurred with the exclusion of a proposal only when proposals were "`fully' effected" by the company. See Exchange Act Release No. 19135 (Oct. 14, 1982). By 1983, the Commission recognized that the "previous formalistic application of [the Rule] defeated its purpose" because proponents were successfully avoiding exclusion by submitting proposals that differed from existing company policy in minor respects. Exchange Act Release No. 20091, at ? II.E.6. (Aug. 16, 1983) ("1983 Release"). Therefore, in the 1983 Release, the Commission adopted a revised interpretation of the rule to permit the omission of proposals that had been "substantially implemented," and the Commission codified this revised interpretation in Exchange Act Release No. 40018, at n.30 (May 21, 1998) (the "1998 Release").

Applying this standard, when a company can demonstrate that it already has taken actions to address the underlying concerns and essential objectives of a shareholder proposal, the Staff has concurred that the shareholder proposal has been "substantially implemented" and may be excluded as moot. The Staff has noted that "a determination that the company has substantially implemented the proposal depends upon whether [the company's] particular policies, practices and procedures compare favorably with the guidelines of the proposal." Walgreen Co. (avail. Sept. 26, 2013); Texaco, Inc. (avail. Mar. 6, 1991, recon. granted Mar. 28, 1991).

At the same time, a company need not implement a proposal in exactly the same manner set forth by the proponent. In General Motors Corp. (avail. Mar. 4, 1996), the company observed that the Staff has not required that a company implement the action requested in a proposal exactly in all details but has been willing to issue no-action letters under the predecessor of Rule 14a-8(i)(10) in situations where the "essential objective" of the proposal had been satisfied. The company further argued, "[i]f the mootness requirement [under the predecessor rule] were applied too strictly, the intention of [the rule]--permitting exclusion of `substantially implemented' proposals--could be evaded merely by including some element in the proposal

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that differs from the registrant's policy or practice." Therefore, if a company has satisfactorily addressed both the proposal's underlying concerns and its "essential objective," the proposal will be deemed "substantially implemented" and, therefore, may be excluded. See, e.g., Quest Diagnostics, Inc. (avail. Mar. 17, 2016); Exelon Corp. (avail. Feb. 26, 2010); Anheuser-Busch Companies, Inc. (avail. Jan. 17, 2007); ConAgra Foods, Inc. (avail. July 3, 2006); Johnson & Johnson (avail. Feb. 17, 2006); Talbots (avail. Apr. 5, 2002); Masco Corp. (avail. Mar. 29, 1999); The Gap, Inc. (avail. Mar. 8, 1996).

The Staff has concurred that, when substantially implementing a shareholder proposal, companies can address aspects of implementation in ways that may differ from the manner in which the shareholder proponent would implement the proposal. Johnson & Johnson (avail. Feb. 17, 2006) (concurring with the exclusion of a proposal that requested the company to confirm the legitimacy of all current and future U.S. employees was substantially implemented because the company had verified the legitimacy of over 91% of its domestic workforce); PPG Industries, Inc. (avail. Jan. 19, 2004) (concurring with the exclusion under Rule 14a-8(i)(10) of a proposal requesting the board adopt a policy statement "generally committing [the company] to the elimination of product testing on animals" in favor of alternative product testing methods, where the company had already issued an "animal welfare policy committing the company to use alternatives to animal testing").

Moreover, the Staff has consistently concurred with the exclusion of shareholder proposals that, like the Proposal, ask the company to adopt a policy where the company has already accomplished the essential objective of the policy. See also , Inc. (?hman Fonder) (avail. Mar. 27, 2020) (concurring with the exclusion of a proposal requesting the Company to adopt a "comprehensive policy applicable to [the Company]'s operations and subsidiaries that commits the [C]ompany to respect human rights" where the Company had a well-established human rights policy); The Wendy's Co. (avail. Apr. 10, 2019) (concurring with the exclusion of a proposal requesting that the company report on its "process for identifying and analyzing potential and actual human rights risk of operations and supply chain" where "the [c]ompany's public disclosures compare[d] favorably with the guidelines of the [p]roposal"); Exelon Corp. (avail. Feb. 26, 2010) (concurring with the exclusion under Rule 14a-8(i)(10) of a proposal that requested a report on different aspects of the company's political contributions when the company had already adopted its own set of corporate political contribution guidelines and issued a political contributions report that, together, provided "an up-to-date view of the [c]ompany's policies and procedures with regard to political contributions"); FreeportMcMoRan Copper & Gold Inc. (avail. Mar. 5, 2003) (concurring with the exclusion under Rule 14a-8(i)(10) of a proposal requesting that the board amend its human rights policy as

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substantially implemented when the company's existing policies addressed the subject matter of the proposal).

B. The Policies And Programs Implementing The Company-Wide Diversity And Inclusion Commitment Substantially Implement The Proposal.

The Proposal requests that the Board "adopt a policy for improving workforce diversity" in order to "further enhance [the Company's] own diversity efforts" by requiring that "the initial pool of candidates from which new employees are hired by the Company shall include, but need not be limited to, qualified women and minority candidates." The Company's existing policies and programs implementing the Company-wide diversity and inclusion commitment compare favorably with and substantially implement the Proposal because they achieve the Proposal's essential objective of improving workforce diversity by "[widening] the talent pool by requiring a diverse set of candidates for consideration before a hiring decision is made."

As disclosed on the Company's website, the Company values and promotes diversity and inclusion in every aspect of its business and at every level of its organization. Moreover, in addition to the Company-wide policies and programs, the Company already has numerous programs across all of the Company's businesses that are designed to achieve the same essential objective as the Proposal of widening the talent pool from which the Company recruits to advance the Company's diversity and inclusion commitment. While the Company's approach to this essential objective is not identical to the policy requested in the Proposal, it still achieves the Proposal's essential objective of improving workforce diversity.

In this respect, the Company's approach is similar to that considered by the Staff in PACCAR Inc. (avail. Jan. 31, 2020), where the Staff concurred with the exclusion under Rule 14a-8(i)(10) of a shareholder proposal requesting that the board of directors "adopt a policy for improving board and top management diversity . . . requiring that the initial lists of candidates from which new management-supported director nominees and chief executive officers . . . recruited from outside the company are chosen by the board or relevant committee . . . include qualified female and racially/ethnically diverse candidates." The company asserted that it had substantially implemented the proposal's request with respect to directors by amending its governing documents6 and with respect to "top management" through other means. Specifically, the company noted that lists regarding external searches for candidates were "not relevant" because the company's actual practice for chief executive officer appointments consisted of internal

6 The board of directors approved changes to the board membership guidelines, which then stated "initial lists of candidates from which new director nominees are chosen will include qualified female and racially/ethnically diverse candidates."

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promotions to the position. However, the company argued that the proposal's essential objective was still accomplished through its internal diversity and inclusion programs, including diversity councils and leadership programs, even though the proposal requested a diversity policy regarding external chief executive officer searches. See also, Wal-Mart Stores, Inc. (Mar. 30, 2010) (concurred with exclusion under Rule 14a-8(i)(10) that the company's existing Global Sustainability Report, which was available on the company's website, substantially implemented the proposal's request for the company adopt six principles for national and international action to stop global warming, even though the Global Sustainability Report set forth only four principles). Thus, just as in PACCAR and Wal-Mart Stores, Inc., the Company has addressed the Proposal's essential objective, albeit in a different manner than set forth in the Proposal based on the Company's own analysis of its U.S. workforce.

II. The Proposal May Be Excluded Under Rule 14a-8(i)(7) Because It Involves Matters Related To The Company's Ordinary Business Operations.

A. Background On The Ordinary Business Standard Under Rule 14a-8(i)(7).

Pursuant to Rule 14a-8(i)(7), a shareholder proposal may be excluded from a company's proxy materials if it "deals with a matter relating to the company's ordinary business operations." According to the Commission release accompanying the 1998 amendments to Rule 14a-8, the term "ordinary business" "refers to matters that are not necessarily `ordinary' in the common meaning of the word," but instead the term "is rooted in the corporate law concept providing management with flexibility in directing certain core matters involving the company's business and operations." Exchange Act Release No. 40018 (May 21, 1998) (the "1998 Release").

In the 1998 Release, the Commission stated that the underlying policy of the ordinary business exclusion is "to confine the resolution of ordinary business problems to management and the board of directors, since it is impracticable for shareholders to decide how to solve such problems at an annual shareholders meeting," and identified two central considerations that underlie this policy. The first is that "[c]ertain tasks are so fundamental to management's ability to run a company on a day-to-day basis that they could not, as a practical matter, be subject to direct shareholder oversight." Accordingly, even if a proposal touches upon a significant policy issue, the proposal may be excludable on ordinary business grounds if the proposal does not transcend a company's ordinary business. The second consideration is related to "the degree to which the proposal seeks to `micro-manage' the company by probing too deeply into matters of a complex nature upon which shareholders, as a group, would not be in a position to make an informed judgment." Id. (citing Exchange Act Release No. 12999 (Nov. 22, 1976)).

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