Shareholder resolutions for political disclosure enjoy significant support
Americans are still reeling from the cacophony of secret money and negative ads that was the 2012 election. Much of the money spent on the congressional and presidential campaigns came from undisclosed sources, underscoring the continued need to fight for reforms to promote transparency in elections.
To that end, Public Citizen and other members of the Corporate Reform Coalition have been pushing the Securities and Exchange Commission (SEC) to create a rule that would require publicly traded corporations to disclose their political spending to their shareholders.
However, this rule has faced opposition from some groups which claim that shareholders neither want nor need this type of information on a company’s spending practices. That narrative is patently false, and many of these groups, like the U.S. Chamber of Commerce (PDF), have a political and financial stake in keeping shareholders in the dark. To the contrary, the results of this year’s shareholder season point to increasing levels of support for measures to bring accountability to corporate political spending.
The first indicator that shareholders are ready to see numbers on political spending is the sheer number of resolutions that have been filed. Since 2010, 282 shareholder resolutions pertaining to company’s political spending have been filed. There were 126 of these types of resolutions filed in 2012 alone, constituting a third of all resolutions filed on social and environmental issues this year. Most major companies can expect to see one of these resolutions at the next annual shareholder meeting; while some will be seeing them for the first time, many will be getting second and third requests. The number of political spending proposals filed each year since the U.S. Supreme Court’s Citizens United ruling has continued to rise steadily. No one expects that trend to reverse as investors come to terms with the outrageous sums of money spent on the 2012 election.
If quantity alone doesn’t cut it, consider that shareholder resolutions calling for political spending disclosure have robust support. The average vote for these proposals has hovered right around 30 percent for the past three years. With each vote consisting of millions of shares, 30 percent is nothing to sneeze at. Quite the contrary, because of the many obstacles to getting a high vote, 30 percent makes the directors of most companies sit up and take notice. A key hurdle to getting a majority vote on disclosure is that millions of shares are owned by huge mutual fund groups like Vanguard and Fidelity, which usually cast their shares as abstentions. If these groups were to vote in favor of political spending proposals, the impact would be tremendous.
Two proposals in the past two years have actually cleared the 50 percent mark. Votes at Sprint Nextel and WellCare Health Plans reached 53.4 and 52.6 percent of shares cast in favor. Fewer than 10 shareholder resolutions on social and environmental policy have ever received a majority vote, and counting two among them on political spending shows the immense support these proposals have from shareholders. In addition, another 20 votes at 14 different companies have been above 40 percent since 2010.
Furthermore, there’s plenty of evidence to suggest the levels of support for these resolutions is earning the respect of many major companies. The Center for Political Accountability (CPA) has reached agreements with 100 companies to create political spending policies that encourage transparency. CPA reached agreements with 13 companies in 2012 alone, including Aflac, Halliburton, Hershey and Safeway. Another indicator that boards and executives are getting the message is that more than a quarter of the resolutions in the past three years have been withdrawn and agreements worked out before votes even take place — which indicates that company directors see it as in the company’s interest to disclose more about their political spending. In other words, resolution withdrawals are big wins for shareholders looking for more accountability from management.
As the numbers and statistics on political spending from this election continue to unfold, they are likely to reinforce the beliefs of Americans who desire a more transparent democracy. If the shareholder resolutions of 2012 are any indicator, this is a sentiment shared by a growing number of American investors. Shareholders are making clear demands for accountability from the corporations they own.
Join the fight for transparency in political spending: Urge the SEC to require publicly traded corporations to disclose their political spending to shareholders.
Kelly Ngo is the legislative assistant for Public Citizen’s Congress Watch. For more about the Corporate Reform Coalition, follow @CorporateReform on Twitter.