At Spring Shareholder Meetings, Resolutions Call for Increased Transparency of Corporate Lobbying and Election Spending
- Dale Eisman
Shareholders Press More Than 100 Public Companies and the U.S. Securities and Exchange Commission (SEC) for Transparency of Political Activity
WASHINGTON, D.C. – At more than 100 annual meetings this spring, shareholders will ratchet up the pressure on corporations to disclose information about corporate lobbying and electioneering expenditures so investors can make informed investment choices.
Shareholders hope their efforts will not only push these companies to adopt individual disclosure procedures, but will also push the U.S. Securities and Exchange Commission (SEC) to protect all investors with a commonsense rule that requires disclosure of political expenditures by all public corporations.
Shareholders have filed resolutions at more than 100 public companies including Bank of America Corp., JPMorgan Chase & Co., Citigroup Inc., Pfizer Inc., Duke Energy Corp., Chevron Corp., Google Inc., Verizon Communications Inc., AT&T Inc. and Comcast Corp calling for increased disclosure of corporate spending on lobbying and/or electioneering. Shareholders will vote on these resolutions at annual shareholder meetings in April, May and June.
At a telephone briefing held today for reporters, members of the Corporate Reform Coalition explained how shareholder resolutions requesting disclosure of corporate political activity have mushroomed in recent years. From 2010 to 2014, shareholders filed 530 resolutions related to corporate political activity. In 2015, resolutions on corporate political activity account for more than one-quarter of all social and environmental proposals, making them one of the most popular proposals for the fifth consecutive year.
Resolutions on political activity are regularly the highest scoring shareholder proposals. Over the past four years, 10 such resolutions have achieved a majority support of shareholder votes. In 2014, four disclosure proposals received majority support notwithstanding opposition from management. Since 2010, shareholder votes about lobbying or election spending have scored 30 percent of votes on average and 46 have scored above 40 percent.
“Shareholders are winning the public debate in support of disclosure, even if corporate managers vote the majority of shares against disclosure resolutions,” said Susan Harley, deputy director of Public Citizen’s Congress Watch division. Public Citizen is a co-founder of the Corporate Reform Coalition. “Corporate political spending requires particular investor protections because it exposes investors to significant new risks. Investors have a right to know what candidates or issues their investments are going to support or oppose.”
“Once again, in 2015, one of the most frequently seen resolutions is a request to companies to either disclose their company’s political contributions or their lobbying expenditures,” said Timothy Smith, senior vice president at Walden Asset Management. “These resolutions have been filed with more than 100 companies sponsored by investors from New York state’s pension funds to foundations, religious investors to investment firms. The strong backing from shareholders for disclosure reflects the risks to a company’s reputation associated with company expenditures to support controversial policy issues and political candidates.”
The shareholder action comes as the SEC is the target of a month-long ad campaign currently on display in Union Station in Washington, D.C., featuring comic strip-style illustrations of frightened investors calling on SEC Chair Mary Jo White to save them from corporations slinging blobs of cash.
Since the U.S. Supreme Court’s overreaching 2010 decision in Citizens United v. Federal Election Commission, corporations have had greater leeway to spend shareholder money to influence politics, but no new rules or procedures have been established by the SEC to ensure that shareholders – those who own the corporations – are informed of decisions about this spending. Political groups that do not have to disclose their corporate donors have spent nearly $650 million in federal elections since Citizens United.
A rulemaking petition at the SEC to require all publicly traded corporations to disclose their political spending has received a record level of support, with more than one million comment letters submitted. However, as the Union Station ads indicate, SEC Chair Mary Jo White continues to be missing in action, leaving many investors to ask, “Where is Mary Jo White?”
“The millions big banks spend on lobbying that allow them to help write the rules pose a unique threat to shareholders,” said Ed Mierzwinski, consumer program director at U.S. PIRG. Their risky practices not only harmed their shareholders, but also collapsed the American economy in 2008. Despite the lessons they should have learned and the risk to shareholders, megabanks are now spending even more on lobbying in their redoubled efforts to repeal parts of Dodd-Frank than they did to block its passage. When a corporation spends tens of millions of dollars lobbying, despite putting shareholder interests at significant risk, more transparency is clearly needed.”
“No one is more guilty of polluting our democracy with toxic money than big polluters themselves,” said Courtney Hight, director of the Sierra Club’s Democracy Program. “Chevron has spent millions trying to roll back clean air and water safeguards and buy votes, but community leaders in Richmond, California and Chevron stakeholders are taking a stand against Big Oil — and they’re winning. The Sierra Club strongly supports stakeholders fighting to get dirty money out of our political system.”
“Disclosure serves the public interest, as well as the interests of the company, its shareholders and consumers,” said Todd O’Boyle, program director for Common Cause’s Media and Democracy Reform Initiative. “Big Cable and Big Telecom’s membership in political groups like the American Legislative Exchange Council (ALEC) and the U.S. Chamber of Commerce represent significant reputational risks for the companies, and therefore financial risks for the shareholders.”