Shareholders target political spending curbs

The two main candidates in this year’s US presidential election stand to gain from large corporations who are attempting to influence their campaigns by pouring money into independent political advocacy groups.

 

The US Supreme Court’s Citizens United decision cleared the way for corporations to donate to tax-exempt organisations that can spend millions without being subject to disclosure requirements (EP, March 2012, p8). 

 

But in sign of a backlash, shareholders are increasingly signalling support for corporate political disclosure in increasing numbers, with investors since filing more than 100 resolutions on unregulated corporate political spending. 

 

The Center for Political Accountability (CPA) says that 51 resolutions were filed this year, of which 13 were withdrawn after agreement was reached between the companies and their shareowners. 

 

Legislative opposition is also on the increase. A petition filed with the US Securities & Exchange Commission proposing mandatory disclosure of political spending has attracted more than 70,000 supporting letters. 

 

In addition, Senator Bernard Sanders of Vermont has proposed a constitutional amendment requesting “the authority of Congress and the States to regulate corporations and to regulate and set limits on all election contributions and expenditures”. 

 

Significant proxy votes have been recorded in many of the ballots and results exceeded 40% at six corporations. At health insurance company WellCare, a resolution gained almost 53% of votes cast. So far in this reporting season, more than half of the 25 resolutions gained 30% or more support, the CPA says.

 

However, the progress since the Citizens United decision is not likely to have much impact on November’s impending presidential election. 

 

A New York Times review of corporate governance reports, non-profit organisations’ tax returns and regulatory filings by insurers and labour unions found donations still flowing from companies including Aetna, American Electric Power, Dow Chemical, Merck and Prudential Financial.