On the 2nd anniversary of the Citizens United Supreme Court decision, two investment firms announce that they have filed shareholder resolutions at three companies, Bank of America, 3M & Target Corporation, urging them to refrain from making political donations in the future. This is the first time institutional shareholders have Continue Reading →
Tag Archives | Citizens United
Catching up on a couple of noteworthy reviews from recent issues of Corporate Governance: an International Review.
Corporate Governance and Complexity Theory by Marc Goergen, Christine Mallin, Eve Mitleton-Kelly, Ahmed Al-Hawamde and Iris Hse-Yu Chiu. Reviewer Diane Denis was hoping the application of complexity theory would lead to insights concerning how and where problems arise, allowing corporations to manage more effectively. Instead, according to Denis, the authors use complexity theory to advocate stakeholder governance. Like other such efforts, they fail to Continue Reading →
The CPA-Zicklin Index of Corporate Political Disclosure and Accountability ranks companies in the S&P 100 according to their disclosure and board oversight of political spending activities. In the aftermath of the Supreme Court’s Citizens United decision, and with the Continue Reading →
With the House controlled by Republicans, we are not likely to see positive action to control or at least require disclosure of political spending by corporations. However, states may be jumping in to take some action.
Under a new Maryland law, which takes effect December 1, 2011, a Continue Reading →
Bill Moyers has been a long-time hero for me, right up there with Bob Monks and Bob Tricker. In an address on the 40th anniversary celebration of Public Citizen, Moyers had some choice words. Below are a few snippets:
Our politicians are little more than money launderers in the trafficking of power and policy – fewer than six degrees of Continue Reading →
First, the IRRC Deadline of November 18 for Research Entries approaches. This is your chance to change the predominant paradigm of Modern Portfolio Theory.
Second, Institutional Shareholder Services Inc. (ISS) extended the comment period on their 2012 proxy voting policies until November 7th. Institutional investors, individual investors, corporate issuers, and governance market participants are invited to provide feedback on ISS’ policy updates. ISS did a specific outreach to CorpGov.net readers, so I Continue Reading →
A group of 43 House Democrats is urged the SEC to require public companies to disclose their political contributions. The Council of Institutional Investors also sent a comment letter on a petition (File Number 4-637) filed by prominent law professors.
Rep. Gary Ackerman (D., N.Y.) and 42 other House colleague argue the high court’s ruling in the case, Citizens United v. Federal Election Commission, was “misguided” and left shareholders “completely in the dark, unaware that their money could be funding political attack ads.”
Shareholders cannot hold corporate management accountable for decisions the shareholders never knew were made. The present system is undemocratic and untenable.
Shortly after the decision, Rep. Gary Ackerman (D-NY) introduced the Corporate Politics Transparency Act, which would require corporations Continue Reading →
CalPERS is in the process of updating their Global Principles of Accountable Governance guidelines, used in corporate engagements. One of the proposed new subsections reads as follows:
6.5 Charitable and Political Contributions: Corporate charitable and political activity can serve the interests of the company and its Continue Reading →
A group of ten very prominent corporate and securities law experts submitted a formal rulemaking petition to the SEC last week urging the Commission to develop rules requiring public companies to disclose the use of corporate resources for political activities to shareowners. Please take a few minutes to join with me writing an e-mail to the SEC in support of their petition and the important issue seeks to address.
The petition was submitted by the Committee on Disclosure of Corporate Political Spending, co-chaired by Lucian A. Bebchuk, Professor of Law, Economics, and Finance at Harvard Law School and Robert J. Jackson, Jr., Associate Professor of Law at Columbia Law School. Bebchuk and Jackson are co-authors of Corporate Political Spending: Who Decides?, and prior posts about the subject of Continue Reading →
The Story of Stuff people did a great job of creating a video about Citizens United, asking for a Constitutional Amendment limiting corporate influence…very ambitious but unlikely to provide a solution anytime soon.
The SEC ruled that shareowner proposals calling for approval of political spending must be included on the company’s proxy card and put to a shareholder vote. However, there are thousands of corporations and tackling them one at a time will also take many years.
Bills introduced last week in both the House and Senate attempt to address Citizens United more globally than one corporation at a time. The Shareholder Protection Act would mandate extensive disclosure, a role for independent directors, and shareowner approval.
- First, the Shareholder Protection Act would require companies to disclose to shareholders each year both the amounts and recipients of the company’s spending on politics. According to Lucian A. Bebchuk and Robert J. Jackson, Jr., the SEC currently has the authority to require disclosures of this type. They urge the SEC to develop rules that would require that shareholders be given information on corporate political spending.
- Second, the Act would require oversight of political spending by the board of directors of amounts over $50,000. Individual board member votes and the details of approved expenditures will be disclosed online within 48 hours and to shareowners and the SEC on quarterly basis. Bebchuk and Jackson also favor requiring directors to provide shareholders, in each year’s proxy statement, with a report explaining their choices and policies concerning the company’s spending on politics.
- Third, an affirmative vote by shareowners would be required to approve the amount of any corporate spending on politics. Bebchuk and Jackson would give shareowners both a say on the overall level of spending and the power to adopt bylaws governing how this spending will be distributed. Giving shareowners veto over the budget for political spending, without any say over the targets of that spending, may unnecessarily limit choices between no spending at all or endorsing management preferences that don’t align with those of shareowners.
More information at Colbert’s Knock Knock Joke is Funny Because It’s True….Unless (The Corporate Library, 7/15/2011), The Re-Introduction of the Shareholder Protection Act, (HLSFCG&FR, 7/14/2011), 11 Reasons Why We Need the Shareholder Protection Act, Business Ethics, 7/13/2011, and Contact Congress via Public Citizens.
The Conference Board formed a committee of representatives from Fortune 500 companies and “corporate citizenship executives” to research issues related to disclosure and accountability of corporate political spending and develop a report by fall that will provide corporations with a toolkit of resources to strengthen their governance practices in this area.
The current member companies of the Committee on Corporate Political Spending include Campbell Soup Company, Exelon Corporation, Merck & Co., Inc., Microsoft Corporation, and Pfizer Inc. The Committee is co-chaired by Dan Bross, Senior Director, Corporate Citizenship, Microsoft Continue Reading →
I’m on vacation, visiting friends in Boaton before Yale Governance forum but this looks noteworthy:
More than 100 protesters bearing signs with messages such as “Hands Off our Elections,” “Corporations are not people,” and “No Mouth, No Soul, No $peech” rallied outside of the not-yet-opened Target store in the East Liberty neighborhood of Pittsburgh, Pa.
Several of the demonstrators – acting as proxies on behalf of Target shareholders – entered the shareholder meeting to interrogate CEO Gregg Steinhafel about the corporation’s expenditure of $150,000 to support an extreme right-wing candidate during the 2010 elections.
Questions about corporate money in politics in the wake of the Supreme Court’s ruling in Citizens United v. Federal Election Commission dominated the shareholder question and answer session.
Checking the Summary Compensation Table, it appears CEO/Chair Francis S. Blake was paid about $10.5 million. Using the United States Proxy Exchange (USPX) released draft guidelines, I am voting against most pay packages over the median for large-caps of $9 million, including this one. I also voted against all members of the compensation committee: Brenneman, Codina and Hill.
I voted in favor of the proposal by Evelyn Y. Davis for cumulative voting. This right could become increasingly important is shareowners are ever given proxy access. I voted in favor of William Steiner’s proposal to allow special meetings to be called by 15% of the shares. I’ve introduced similar proposals and see this as simple good governance.
Similarly, I favor the proposal by Trillium Asset Management for a diversity report. Home Depot should take a leadership position on this important issue. I also favor the proposal from NorthStar Asset Management Funded Pension Plan to allow a shareowner vote on specified political expenses. After Citizens United, I think such votes at every company are warranted.
Green Century Capital Management, Inc., a Boston-based investment adviser to the environmentally responsible Green Century Funds, announced that Eastman Kodak Company (Kodak) joins 79 other companies that have agreed to greater political transparency and accountability, according to the Center for Political Accountability (CPA).
Kodak will provide increased transparency on its payments to trade associations and other tax exempt groups and will provide more information on its accountability structures governing its political giving.
The agreement resulted from a dialogue Green Century had with the company in conjunction with the CPA, a nonprofit, non-partisan advocacy organization leading the political disclosure and oversight effort. Green Century stressed the importance of ensuring shareowners are aware of the full spectrum of political spending made by their firms, especially those made through trade associations like the U.S. Chamber of Commerce.
Companies are not required by law to disclose political contributions or payments to trade associations for political purposes. Moreover, trade associations are not required to disclose the specifics of their political spending or their membership. This secrecy leaves institutional investors, individual shareholders and even member companies in the dark.
In light of the Supreme Court ruling in Citizens United v. Federal Election Commission, which permits corporations to spend freely on independent advertising for and against political candidates, many investors believe this type of disclosure is more Continue Reading →
Corning’s 6-minute video for CEO Wendell Weeks’ presentation to institutional investors and analysts in New York Feb. 4th has become the most-watched corporate video of all time on YouTube with more than 8.8 million views.
It showcases potential Continue Reading →
In 2011, investors including many of our managers are filing 83 different corporate political spending shareholder resolutions. The motivation for these resolutions comes directly from the landmark decision by the Supreme Court in Citizen’s United vs. Federal Election Commission case that permits corporations to spend freely to influence American elections.
By now, most people are familiar with the Story of Stuff Project directed by Annie Leonard and produced by Free Range Studios. This year, they’ve put together a great video focusing on Citizen’s United vs. FEC.
Watch the video which explains the issues in a fun, easy to digest way. At the same time they propose solutions such as a constitutional amendment to overturn the Supreme Court’s ruling and implement public financing of elections. (Thanks to Goodfunds Wealth Management).
Watch the video at Story of Stuff. And a great follow-up is Naomi Kline talking about Disaster Capitalism on the Rachel Maddow Show. See also, The Shock Doctrine: The Rise of Disaster Capitalism
Robert A.G. Monks has a new site and blog. It looks great. Read his Response to the Financial Crisis Inquiry Report: Part 1. Monks once again identifies owners as the appropriate party to monitor corporate management. He notes that Greenspan was not only mistaken in his belief that corporations will preserve and enhance their own value, but he failed to recognize Continue Reading →
This month marks the first anniversary of the landmark Supreme Court Citizens United decision striking down restrictions on independent political spending by corporations and unions. But heated national debate continues. Major controversy has erupted over independent or third party organizations channeling secret donations into the elections. President Obama strongly criticized the decision, stating that it would “open the floodgates for special interests, including foreign corporations, to spend without limit in our elections.”
Polls showed that 80 percent of Americans opposed the decision.
In reaction, the House passed disclosure legislation but it failed in the Senate. As a result, millions of dollars in undisclosed donations poured into the 2010 elections. The Chamber of Commerce alone spent a reported $75 million to unseat primarily Democratic members of Congress who opposed Chamber policies.
With government stalled, it will be up to private citizens to take action. Some groups have called for companies to disclose their donations. But since the largest share of these secret donations goes to buy expensive TV ads, the focus should be on the major broadcast and cable TV companies. There is another way to end donor secrecy:
Shareholders should file resolutions requesting television companies to refuse ads from groups which don’t provide full disclosure of donors.
Ironically, the concentration of TV ownership makes this approach practical. A handful of publicly traded companies dominate the US media landscape. These include GE/Comcast (NBC), Disney (ABC), CBS, News Corp (Fox),and Time Warner
People assume that stations must run these ads since the Communications Act of 1934 requires that broadcasters grant “reasonable access” to airwaves for political speech. However, that rule has typically been applied to candidates for political office, not independent groups. Regulations governing direct candidate advertising don’t apply. The FCC has no rule prohibiting stations from refusing such ads.
Stations frequently do refuse political ads. In a case involving anti-war ads, the Supreme Court ruled that “the Communications Act…does not require broadcasters to accept editorial advertisements.” Indeed, during 2008, some TV network affiliates refused to run anti-Obama ads.
Further, since stations have the discretion to refuse the ad, they are no longer shielded from liability for the accuracy of the ads, just as with a commercial product. In a Congressional race, a Denver TV station stopped running a third party ad stating that the sponsor failed to substantiate its claims.
Given this legal liability risk, shareholders must weigh the possible financial impact to their company of running such ads without full transparency. Currently, third party ads only have to disclose the sponsor’s name, contact information and key officers.
A second issue for shareholders is that the station’s association with ads funded by secret donations could harm the company’s reputation and potential profits. This happened to the Target Corporation, which became the object of a boycott after disclosure of a donation to an organization running ads supporting an anti-gay marriage candidate.
Finally, public distaste for secrecy, combined with the potential for foreign influence over US elections, is more reason for the media to adopt disclosure policies. Without full disclosure, shareholders can clearly claim that there is no way for companies to eliminate legal and financial risk. This shareholder claim is expressly affirmed in the proposed Congressional DISCLOSE ACT,
The American people have a compelling interest in knowing who is funding independent expenditures …to influence Federal elections… (D)isclosure of the funding sources… can provide shareholders, voters, and citizens with the information needed to evaluate the actions by special interests seeking influence over the democratic process. (emphasis added.)
It is time for shareholders to stake their claim AND FILE shareholder resolutions.
© Copyright Ron Freund January 2011. Ron Freund is Director of Corporate Responsibility for the Social Equity Group, a California socially responsible investment firm.
Vermont, state senator Virginia Lyons introduced a bill to seek an amendment to the US Constitution providing that corporations are not persons. The movement is in reaction to the Supreme Court’s Citizens United decision, which allows unlimited corporate spending in elections as a form of “free speech” for the corporate “person.” According to dissenting Justice John Paul Stevens:
Corporations have no consciences, no beliefs, no feelings, no thoughts, no desires. Corporations help structure and facilitate the activities of human beings, to be sure, and their ‘personhood’ often serves as a useful legal fiction. But they are not themselves members of ‘We the People’ by whom and for whom our Constitution was established.
According to a ABC News poll, 76% of Americans oppose the Citizens United decision. (Vermont Is Gearing Up to Strike a Major Blow to Corporate Personhood, Ban It Statewide | AlterNet.)
Time to get on board by signing the MoveOn.org petition. Here’s the full text of the petition:
- “Corporations aren’t people and shouldn’t be able to corrupt our democracy. We need as many state legislatures as possible to get behind the call for a constitutional amendment to reverse the Citizens United ruling.”
We’re asking every state legislator in the country to back adopting resolutions supporting the only remedy we have left to correct the Supreme Court’s Citizens United decision: a constitutional amendment clarifying that corporations are not people.
A new study finds that while nearly 80 percent of S&P 500 companies have disclosed direct political campaign spending policies, 86 percent have no disclosed policies regarding indirect political expenditures. Additionally, only 20 percent of corporations disclose how much is actually spent and which organizations or causes receive the funds.
Key research findings include:
- Nearly 80 percent of the S&P 500 companies have disclosed political campaign spending policies. However, only a distinct minority has stand-alone policies that are easily accessible and with clear descriptions of spending decision making and oversight. The publicly available language that companies use to describe their political spending is usually not precise, and rarely includes all types of political spending.
- 86 percent of the S&P 500 does not have stated policies on indirect political spending via contributions to trade associations and non-profit interest groups that have become a key area of concern. Financials firms are notably less likely than other sectors to have any policies on indirect spending.
- Less than one-quarter of S&P 500 companies require their boards to oversee political spending. Nearly all of those are the largest companies in America. Least likely to have oversight are smaller companies and companies in the Consumer Discretionary sector. Board oversight is more prevalent in the Health Care sector, which has been in the spotlight in recent elections and the subject of sweeping and controversial reform enacted in March 2010.
- More than 80 percent of the S&P 500 companies do not provide information on actual contributions, as opposed to the policies that ostensibly control that spending. Almost all companies that do report are at the top end of the revenue scale. One-third of Health Care companies disclose spending but only about 10 percent do in three other sectors—Financials, Telecoms and Consumer Discretionary.
- Only 52 companies indicated they do not use “independent expenditures” to advocate for or against the election of candidates.
- About half of all S&P 500 companies provide some information on which company officers make spending decisions. This management transparency is most common among Consumer Staples companies. In contrast, Financial sector companies provide the least amount of information, even though Congress enacted significant and contentious reforms for the industry in July 2010.
- Nearly 60 percent of S&P 500 companies spend shareholder money from the corporate treasury on political campaigns, while two-thirds have political action committees that spend money contributed by corporate executives. Utilities – amongst the most highly regulated industries – are more likely than any other sector to support candidates, parties and interest groups’ political committees. Information Technology companies are the least likely to spend in these categories.
- Board oversight encourages disclosure of what companies do spend, but there is no evidence that such oversight affects spending.
The study was conducted through an examination of S&P 500 companies’ federal and state campaign contribution data and other publicly available information, combined with the results of a Si2 survey sent to each company. The report also includes two case studies and a short primer on the various types of political spending. The full study is available at www.irrcinstitute.org and www.siinstitute.org and is included in the IRRC sponsored Social Science Research Network Corporate Governance Network at http://www.ssrn.com/cgn/index.html. (full press release)
On a related note, John Coates has a draft study, Corporate Governance and Corporate Political Activity: What Effect Will Citizens United Have on Shareholder Wealth?, that found during the period 1998-2004 shareholder-friendly governance was consistently and strongly negatively related to observable political activity before and after controlling for established correlates of that activity, even in a firm fixed effects model. Political activity, in turn, is strongly negatively correlated with firm value. These findings – together with the likelihood that unobservable political activity is even more harmful to shareholder interests – imply that laws that replace the shareholder protections removed by Citizens United would be valuable to shareholders.
See prior post, Citizens United: Most Won’t Engage But Won’t Monitor Either, as well as Follow the (Corporate Campaign) Money @ the The Murninghan Post, 10/14/2010.
Back in July, I signed onto a letter from the Center for Political Accountability, Walden Asset Management and Domini Social Investment asking companies about their use of new corporate political spending routes opened up by the Citizens United decision.
As of October 7, 2010, 68 companies have formally responded, with several more responses expected.
35 of the responders stated they do not plan to engage directly in any independent expenditure activity. However, relatively few companies have committed to hold their trade associations’ political spending to scrutiny by imposing conditions on dues payments or other means. Other notable trends and highlights in the responses include:
- Many smaller companies stated that because they generally do not engage in the political process, they do not see the need to implement a policy regarding independent expenditures or trade association monitoring.
- Several companies stated that they currently or will begin to inform their trade associations that no portion of their dues may be used for political expenditures. Philip Morris International included a template of the communication it sends with its dues payments stating that none of the dues may be used for election activity.
- Many larger companies declined to answer the questions posed or commit to any increased disclosure.
- 30 companies stated that they would not engage in independent expenditures, but were reluctant to monitor or impose conditions on their trade association payments or did not address the issue at all.
- All of the responders in the health insurance industry (Aetna, UnitedHealth, WellPoint) declined to outline their positions on independent expenditures.
- Several responders appear to still be reviewing the implications of Citizens United and were not in a position to comment on the questions posed in the letter. Some of these responders say they will consider our ideas when formulating their policies.
Further information at Companies spend indirectly on politics (USA Today, 9/8/2010) and in this summary document (pdf) with 2-3 prominent quotes from all of the responsive companies. Contact: Aaron W. Stanley, Staff Associate, Center for Political Accountability.
The Investor Responsibility Research Center (IRRC) Institute and Sustainable Investments Institute (Si2) will host a webinar on Thursday, October 14, 2010 at 3 PM ET to review the findings of a new study, “How Companies Influence Elections: Political Campaign Spending Patterns and Oversight at America’s Largest Companies.” Pre-register for the webinar here.
The study is the first comprehensive report benchmarking the governance of corporate political spending. It comes against the backdrop of the Citizens United vs. The Federal Election Commission Supreme Court decision and an unprecedented flow of funds – increasingly from indirect spending – into elections. This study was conducted through an examination of S&P 500 company data and responses to an Si2 survey. The report includes two case studies and a political spending primer.
VoterMedia.org is a website that helps a community connect with its elected leaders, by letting voters allocate community funds to competing blogs. It motivates the bloggers to become community media. In this video, students at the University of British Columbia talk about how VoterMedia has helped their student union, which is called the Alma Mater Society, or AMS. In the not too distant future, we hope to be viewing videos of shareowners discussing how VoterMedia and various bloggers have helped transform their companies.
No matter what you think of the following protest at a Target store, expect to see many more like it as a result of the Supreme Court decision of Citizens United. If anything good comes out of that decision it will likely be that it raises awareness of corporate influence over politics. Now, maybe many more will favor reforms to limit their influence. Until then, just as news programs are starting to divide between left and right, we can expect shoppers to channel their money to whichever side they believe is politically correct. See also, 3 shareholder groups call on Target, Best Buy to review political giving after Minn. donations, LATimes, 8/20/10.
The House Financial Services Committee approved a bill that would require companies to obtain investor approval before spending more than $50,000 per year in general corporate funds on political activities. H.R. 4790, the “Shareholder Protection Act of 2010,” was inspired by the Supreme Court’s Citizens United decision in January, which lifted restrictions on independent expenditures by companies. The bill would require issuers to obtain shareholder authorization each year for “expenditures on political activities,” which include independent expenditures, contributions to political parties or committees, and contributions to trade associations or other tax-exempt organizations. (House Panel Endorses Shareholder Votes on Political Spending, RiskMetrics Group, 7/29/10)
The U.S. Chamber of Commerce immediately sent a letter to the House of Representatives expressing strong opposition to H.R. 4790, the so-called “Shareholder Protection Act of 2010,” citing the onerous burdens placed on corporate directors who have been empowered to carry out good faith business decisions. The Chamber’s letter asserts that this extra layer of shareholder authorization will hinder, through increased regulatory hurdles, a company’s ability to exercise its constitutional right to free speech. (U.S. Chamber Expresses Strong Opposition to Shareholder Protection Act, the Financial 7/29/10)
A consortium of 56 of the biggest corporations in America, including ExxonMobil, Shell Oil, and BP have united to spend over $500,000 in just a single local election to defeat Betsy Butler, running for the California State Assembly in the 53rd district. She’s supported by environmental groups. How is the consortium doing it? By linking her to big oil.
Fliers for the June 8 primary have been relentlessly pouring into district mailboxes, screaming that Betsy Butler is in the pocket of big oil, drug and insurance companies. The front organization is The Civil Justice Association of California (bringing “balance” to the justice system), operating for this campaign out of Unit 436 at a local Mailboxes Etc. It makes me wonder if they’re also bilking Medicare on the side for durable medical equipment.
From Nell Minow, “The Supreme Court’s decision in Citizens United gave free rein to corporate ‘speech’ in politics but it did not require them to tell us who is behind it. That kind of ‘free speech’ is going to prove very expensive for democracy.” (The Betsy Butler Smear: It Gets Even Worse, The Huffington Post, 6/1/10) Who’s trying to buy your local election?
What’s the difference between the role of advisors and a board of directors for a start-up? At what point in your development should you build each group? Tips for creating an Advisory Board or Board of Directors: choosing the right people, defining objectives and expectations and compensation issues (i.e. What’s in it for them?) Common pitfalls to avoid Find out how having with the right advisors and board members can help you build your business. Moderator: Ron Close Panel: David Pasieka, Kerri Golden and Bill Wignall. (The Role of Advisory Boards and Boards of Directors, video format – 2009/10, MaRS
California state pension funds going broke, Stanford study finds (Stanford University News, 4/5/2010) “The simulation shows that the state would need to invest more than $200 billion, and possibly as much as $350 billion, today to return the fund to a minimum responsible level of funding.” CalPERS Response to Stanford Policy Brief on Public Pension Funds (4/6/2010) “The study relies on data when the system had $45 billion less in assets than it has today.” Findings are based on a mathematical model that uses current interest rates, which are very low and make liabilities appear to be much higher, in a manner inconsistent with accounting standards. Pension reform issue in race for governor (CalPensions, 4/7/2010)
Blackstone Group LP, the world’s largest private equity firm, is challenging a California Public Employees’ Retirement System proposal to prohibit money managers from dangling contingency fees in front of middlemen who help win pension fund contracts. (Calpers, Blackstone Clash Over Placement Agent ‘Jackpot’ Fees, BusinessWeek, 4/7/2010)
Unilever stopped providing earnings guidance. The initial impact of that was a 6% drop in the share price. But things have bounced right back since then. Is it time to shift from maximizing shareholder value? (IR magazine) (Time to shun short-termism, InvestorsChronicle, 4/7/2010) Executives lack the incentive to begin investments that they will not be around to see through, and decisions made to boost short-term profits can undermine relationships built up over many years.
The Center for Political Accountability (CPA) and the Council of Institutional Investors jointly sent letters to 427 of the companies in the S&P 500 stock index, asking them to disclose all their political contributions. As of early March, 46 resolutions on corporate political spending had been filed for 2010, versus 48 for all of last year, according to proxy advisory firm RiskMetrics Group Inc. (Shareholder groups seek to limit corporate contributions, Christian Science Monitor, 4/5/2010)
“The lawmen and bandits who fought it out at the infamous O.K. Corral in 1881 had no idea how the showdown would play out – and neither will you if your company becomes an activist’s target. But that doesn’t mean you can’t be prepared. Maureen Wolff-Reid offers four steps, including Stay Out of the Crosshairs, Keep Your Friends Close . . . , . . . And Your Adversaries Even Closer, Be Quick on the Draw. (Winning the Gunfight at the Proxy Corral – Four Steps to Prepare for Shareholder Activism, Sharon Merrill Associates, 4/7/2010)
“Within a week of Sen. Christopher Dodd (D-Conn.) unveiling his 2,200-page finance reform legislation, more than 750,000 articles had been published about it, pushing, prodding, and analyzing its provisions.” Stephen Davis and Jon Lukomnik advise against squandering time on crystal-ball-gazing, since “the most interesting part of the Dodd bill’s governance provisions is how much of them fall into step with trends already well under way.” (A Closer Look at Dodd Bill’s Governance Provisions, Compliance Week, 4/6/2010; see also NACD Washington Update: More Efforts to Federalize Governance, Directorship, 4/7/2010)
Ceres has released the 21st Century Corporation: The Ceres Roadmap to Sustainability as a vision and practical roadmap for integrating sustainability into the DNA of business—from the boardroom to the copy room. It analyzes the drivers, risks and opportunities involved in making the shift to sustainability, and details strategies and results from companies who are taking on these challenges. This Roadmap is designed to provide a comprehensive platform for sustainable business strategy and for accelerating best practices and performance.
62% of top-quartile mutual funds for the 10 years through Dec. 31 suffered stints of five-year below-median performance along the way, according to investment consultant Dimeo Schneider. (Don’t give up too soon, study finds, P&I, 4/5/2010)
“Until now, corporate interests had to rely on campaign contributions and influence-peddling to achieve their goals in Washington,” Murray Hill Inc. a public relations firm, said in a statement. “But thanks to an enlightened Supreme Court, now we can eliminate the middle-man and run for office ourselves.”
William Klein, a “hired gun” who has been enlisted as Murray Hill’s campaign manager, said the firm appears to be the first “corporate person” to run for office and is promising a spirited campaign that “puts people second, or even third.”
The firm is seeking to enter the Republican primary for the 8th District seat held by Rep. Chris Van Hollen, since “we feel the Republican Party is more receptive to our basic message that corporations are people, too.” (Campaign stunt launches a corporate ‘candidate’ for Congress, The Washington Post, 3/13/10)
“In many ways, 2010 is the Foundation Proxy Season. By next year, the world will be changed. It is likely that both say-on-pay and proxy-access measures will be mandated. Directors will undoubtedly face greater scrutiny and more challenges than ever before. As a result of these impending challenges, boards must use the 2010 season to lay a strong foundation that prepares them for the future. That means building relationships with investors and strengthening management teams and boardroom rosters.” (This Proxy Season: Bowling for Ballots, Directorship, 2/11/10) Like always, Patrick McGurn provides the best insights into this year’s proxy season.
For companies trying to figure out how to address the new disclosure requirements related to board qualifications, leadership structure, risk oversight, etc., Broc Romanek has you covered, offering up samples at TheCorporateCounsel.net Blog. (Samples: Companies Complying with the SEC’s New Rules, 2/11/10)
Ceres, in collaboration with Bloomberg and UBS, launched a new benchmarking study today called “Murky Waters: Corporate Reporting on Water Risk.” The report (available here) ranks 100 publicly-traded companies in 8 water-intensive sectors on their water risk disclosure: beverage, chemicals, electric power, food, homebuilding, mining, oil & gas, and semiconductors.
Senate Bill 1007, by Democratic Sen. Loni Hancock of Berkeley, would require candidates for board seats with the California Public Employees’ Retirement System and the California State Teachers’ Retirement System to file ongoing campaign contribution and spending reports during and after an election. (Bill would boost CalPERS, CalSTRS election transparency, From The Capitol, 2/10/10)
Shareowner organizations are working together to advance a three-pronged response to the last month’s U.S. Supreme Court decision providing much greater latitude to corporations making campaign contributions:
- Direct engagement of management at publicly traded companies, modeled on the work done by Bruce Freed at the Center for Political Accountability and a number of institutional shareholders, as well as under the guidelines of the Council of Institutional Investors (CII). That engagement through shareholder resolutions and one-on-one company “dialogues” typically involves (1) disclosure of a company’s soft money contributions, payments to trade associations and other tax exempt organizations used for political purposes, and grassroots lobbying expenditures; (2) disclosure of a company’s policies and procedures for political contributions and expenditures; (3) identification of persons participating in decision-making on the contributions and expenditures, and (4) board oversight of the company’s political contributions and expenditures.
- Outreach to the Securities and Exchange Commission (SEC), through both the Investor Advisory Committee and a direct petition requesting SEC rulemaking in this area.
- A letter to Congress from the shareholder community asking lawmakers to ensure that shareholders have all tools they need to ensure that decisions about political spending by public companies does not erode shareholder value and the long term sustainability of the company.
More information available at ShareOwners.org. Can shareowners wrench control over the corporations they own before managers consolidate their already often dominate positions over boards and Congress? Will company funds pour into political campaigns that benefit a broad base of long-term shareowners whose interests are closely aligned with that of the whole nation, or will they be used to reinforce a greedy few?
Robert A.G. Monks said: “The bad news is that Citizens United represents the worst judicial decision since Dred Scott; the good news is that the Supreme Court of the United States has held that there is such a thing as corporate democracy. Now is the time for shareholders to put that democracy to work to protect their own interests against boards that may want to ‘play politics’ and have no clue as to how to do so without devaluing their companies.”
Bill De Blasio, a trustee of the New York City Employees’ Retirement System (NYCERS), says his office “will work with the investor community, particularly through entities like the Council of Institutional Investors, to build a national shareholder movement behind full corporate disclosure. But this is just the beginning. Going forward we will also seek to give shareholders a greater say in whether or not companies they invest in should engage in political spending, especially if it has no limits. We will support and applaud corporations that voluntarily empower shareholders by giving them greater access to and authority over campaign spending. And we will continue to shine a light on companies that resist these reforms.” (Transparency Can Curb Corporate Impact on Elections, The Nation, 2/1/2010)
Maybe Citizens United will unite us. We’d better do it fast though. Democracy is fast disappearing.