Tag Archives | disclose

Investors Seek Disclosure of Corporate Lobbying Expenses

Citizens United and Pay 2 PlayResolutions Filed at 53 Companies

Disclosure of corporate lobbying expenses remain top shareholder proposal topics for 2015, as more than 60 investors have filed proposals with more than 50 companies asking for reports that include federal and state lobbying payments, political contributions and/or payments to trade associations used for lobbying and payments to any tax-exempt organization that writes and endorses model legislation.

In 2014, resolutions relating to corporate political and lobbying expenses of a company were among the most common shareholder proposal put forth during the proxy season for the fourth consecutive year, and it is expected that these will be among the most popular shareholder proposal topics for 2015 proxy season. The bulk of political spending resolutions fall under two categories, either requesting disclosure of lobbying expenditures or seeking disclosure of political contributions. Continue Reading →

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Retail Shareholder Proxy Participation: Part 3 – VIFs & CITs

elephant in the roomI will be on a panel at the 2/19 SEC Roundtable discussing how to increase retail shareholder participation in the proxy process. The SEC agenda is in bold italics.  Our thoughts on VIFs and CITs are in normal type. Part 1 is here. Part 2 here.

This panel will focus on strategies for increasing retail shareholder participation in the proxy process. The panel will discuss how technology – by providing better access to information or easier means of voting – might affect retail participation. In addition, the panel will discuss whether the format of disclosure could be improved to increase the engagement of shareholders and how the mechanics of voting could be improved to affect retail shareholder participation. Continue Reading →

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Mutual Funds Should Disclose Votes

On December 19, 2000 the AFL-CIO petitioned the Securities and Exchange Commission to require mutual funds to disclose how they are voting their shares. Currently, mutual funds aren’t required to disclose the principles they use when voting in corporate elections. Nor do they have to tell investors how they voted. Unlike pension funds, there isn’t even a requirement that mutual funds vote in the best interest of shareholders.

Recently, the UK began requiring that pension funds disclose their social investment policies (if they have such policies). Just as that law brought a new level of scrutiny to the investment decisions of UK pension funds, the reforms advocated by the AFL-CIO would allow individual investors in the US to ensure their shares are being voted consistent with their values.

As early as 1988 the Department of Labor set forth the opinion that, since proxy voting can add value, voting rights are subject to the same fiduciary standards as other plan assets. In my opinion, it’s about time that mutual funds and other institutional investors also accepted the responsibilities of ownership.

Most mutual funds don’t disclose their proxy voting policies or their votes. Perhaps they are reluctant to provide such disclosure for fear of being deselected by corporate 401(k) plans over particular votes. In addition, in many fund families the votes of the funds are probably not in harmony. Some funds will initially find such disclosures difficult, since they risk losing corporate clients. However, if it is a legal requirement, there will be a level playing field where advantage can best be gained by working in the shareholder’s best interest. Disclosure of mutual fund proxy voting policies and voting behavior should enhance the return on capital by increasing the accountability of corporate officers to corporate owners.

To make the information easy for investors to use, the AFL-CIO asked the SEC to require mutual funds to disclose both holdings and voting information on the Internet in a user-friendly format. A copy of the petition is available by calling (202) 637-3900. For information contact: Bill Patterson (202) 637-3900 or Lane Windham (202) 637-5018. I encourage all readers to add their voices to the AFL-CIO’s request. If fulfilled, it would be one of the most important developments in corporate governance ever.

For more information, read Mercer Bullard’s article “Make 2001 the Year You Become an Activist Fund Shareholder” in TheStreet.com, or go directly to his Fund Democracy website for sample letters to the SEC and additional resources. In a follow-up article, “Are Ballots Too Secret? Fund Advisers Should Tell How They Vote Proxies,” Bullard says the AFL-CIO’s proposal “holds out the best hope for improving corporate democracy in 2001.”

In my opinion, if adopted, mutual fund vote disclosure would rank in importance with the DOL mandate that pension funds treat voting as a plan asset and the SEC’s 1992 reforms which allow shareholders to communicate with each other without going through elaborate and expensive filing procedures.

 

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