Through shareholder activism, shareholders can exercise their rights as investors and thereby influence a corporation’s behavior. Since shareholders are not in a position to manage the company, shareholder activism is a means to influence the decisions made by not only the board, but also management. For over a decade, shareholders have used shareholder proposals to raise the issue of corporate political spending.
Shareholders continue to seek increased transparency with respect to a company’s political activities and the potential legal and reputational risks such activities may create. Additionally, shareholders want to ensure that decisions regarding corporate political activity have strong board oversight. Therefore, shareholder proposals calling for corporate political spending transparency allow the shareholder to monitor and hold executives accountable and ensure that a nexus exists between the political activity and the shareholders’ interests.
In 2011, shareholder activists encouraged the Securities Exchange Commission (“SEC”) to mandate disclosure of corporate political spending. A rulemaking petition submitted by ten corporate law professors invited the SEC to create rules that would require public companies to disclose their corporate political spending practices. Although the rulemaking request would be limited to public companies (and would not apply to unions or privately held corporations), the petition has received much interest by both the media and academics. As a result, there continues to be strong debate over whether companies should be required to disclose their corporate political spending or whether the process should remain completely voluntary.
Although a potential regulation to require public companies to disclose their political spending by the SEC is no longer on the list of the agency’s regulatory priorities for 2014, there continues to be a strong desire at least among some shareholders for more disclosure of corporate political spending.
A review of the 2014 Proxy Season
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The following resources will assist you in understanding who the shareholder proponents are and how shareholders are reacting to the issue.
Review of Political Disclosures
Baruch Index of Corporate Political Disclosure
The Baruch Index of Corporate Political Disclosure measures a company's willingness to disclose and be transparent about its corporate political activity. View the Baruch Index latest results here.
Center for Political Accountability Corporate Disclosure and Accountability Database
The Center for Political Accountability (“CPA”) examines company political spending and produces reports regarding a company’s disclosure efforts. Since 2011, the CPA has partnered with the Zicklin Center for Business Ethics at the Wharton School of the University of Pennsylvania to grade companies’ disclosure of political activities. It also provides links to corporate political activity policies. Click here to view the 2014 CPA-Zicklin Index. Results from the 2011 – 2013 Indexes are also available.
Shareholder Advisory Guidelines
Council of Institutional Investors Corporate Governance Policies
The Council of Institutional Investors (“CII”) educates the public about effective corporate governance, including board level oversight of political contributions.
Glass, Lewis & Co., LLC Proxy Guidelines
The Glass, Lewis & Co., LLC is proxy advisory service that makes case-by-case voting recommendations on shareholder resolutions, including resolutions seeking disclosure of political activities.
ISS U.S. Proxy Voting Summary Guidelines
The ISS is proxy advisory service that makes case-by-case voting recommendations on shareholder resolutions, including resolutions seeking disclosure of political activities.
Shareholder Resolution Information
Proxy Monitor by The Manhattan Institute's Center for Legal Policy
Proxy Monitor compiles information on shareholder proposals, including corporate political spending proposals. Users can search the Proxy Monitor database by year, company, industry, proponent (primary sponsors of shareholder proposals), and proposal type (general or specific).
SI2’s 2014 Corporate Political Activity Proposals Mid-Year Report
The Sustainable Investment Institute (“Si2”) analyzes the 2014 shareholder proposals on corporate political activity and provides detailed information about the proposals, the proponents, and the shareholder votes.
Corporate Political Spending Accountability
Coalition for Accountability in Political Spending
The Coalition for Accountability in Political Spending (“CAPS”) provides research pertaining to how corporations can strengthen their political spending policies. CAPS is a coalition of public officials dedicated to transparency in corporate political spending.
The Conference Board does not represent that the data, information, analysis, conclusions, or opinions provided by the listed Internet resources are correct or complete. The Web sites and resources listed above are included for informational purposes and convenience only, and are not affiliated with, endorsed, or recommended by The Conference Board, the Committee, or its members.