February 15, 2007
Shareholders Ask Companies for Transparency on Corporate Political Giving
by Anne Moore Odell
With 43 companies facing shareholder resolutions on political accountability this proxy season, a
handful of companies have already reached agreements with filers on this issue.
As the 2007 proxy season begins, one of the major conversations at shareholder meetings will center
on companies’ disclosure of political giving. The tangled web of political contributions is often
difficult for shareholders to follow. Many companies give money directly to candidates and
campaigns, and make indirect contributions through trade associations and other tax-exempt
organizations. This season, institutional investors and allied shareholders have filed 43
resolutions asking companies to report on how the money from their corporate treasuries is spent on
The Center for Political Accountability (CPA) worked with 25 institutional investors to file
resolutions based on models created by the CPA. These resolutions urge companies to disclose soft
money expenses and to require board oversight of how these moneys are allocated.
Green Century Capital
Management, working with the CPA, was one of the institutional investors to file resolutions
with three energy companies: American Electric Power (AEP), Xcel Energy (XEL) and FirstEnergy Corp.
(FE). "Companies wield tremendous political influence, but they aren’t required by law to disclose
their political contributions," said Andrew Shalit, Director of Shareholder Advocacy at Green
Century Capital Management, explaining the importance of the proposals to SocialFunds.com. "We
think that’s wrong, not just for the public interest but also for shareholders. When political
contributions are made without proper oversight, there is room for all manner of abuse. We’re
gratified that more and more companies are recognizing that," he added.
accountability resolutions can be broken into two related camps. The first type of resolution, in
front of 31 companies, urges disclosure and board oversight of company soft money contributions and
full disclosure of moneys given to trade associations and allied groups. The second group of 12
companies faces a resolution that just asks for disclosure and board oversight on corporate soft
The role that trade associations play in the political arena is
especially nebulous. Trade associations hold no accountability to any company or interest group and
don’t need to make public their membership rolls or their political activities. Companies—and
therefore shareholders—are unable to discern how and where their contributions are being spent.
"We raised the question of political contributions made through trade associations because
these associations represent another channel for political influence. Trade associations really
are stand-alone groups of political operators that can significantly lag the companies that they
represent," Shalit said. Without proper oversight, trade associations could be supporting causes
that are antithetical to the companies funding them.
Seven companies have already reached
agreement with the resolution filers on political transparency ahead of the proxy-voting season.
Another 12 companies are currently in dialogues with filers. The seven companies that have already
reached agreements are American Electric Power (AEP), General Dynamics (GD), General Electric (GE),
Hewlett-Packard (HP), Home Depot (HD), Monsanto (MON), and Verizon Communications (VZ).
Trillium Asset Management was the lead
filer on four of the political accountability resolutions at Hewlett-Packard (HPQ), General
Electric (GE), DuPont (DD) and Dominion Resources (D). AEP, GE and HP reached agreements with
Trillium prior to any votes, with Dupont still in discussion with Trillium and other filers.
Shelley Alpern, Vice President of Trillium, spoke to Socialfunds.com about Trillium’s success
with HP and other companies. She said, "Trillium was very satisfied with the responses in regard to
the trade associations. I think all of us, including the companies themselves, would like the trade
associations to make contributions records available."
HP stands out by agreeing to total
disclosure of its trade association donations. HP has pledged to report all of the donations it
makes to trade associations, no matter how large or small the donations are. HP’s commitment is
significant, because, like most major companies, belongs to hundreds of trade associations all over
the country. Other companies differ in the agreed upon details of the proposal. For example, GE and
AEP will only report donations of $25,000 or larger to trade associations.
decided to focus this proxy season on trade association contributions coming from corporate funds
versus employee PAC giving. Although it’s a well-known fact that employees are frequently pressured
to give money to the company PAC, the disclosure of PAC giving is already mandated by the Federal
Elections Commission for any amount at or above $200. Next, those donations come from employees'
pockets, not from corporations’ funds.
All of the companies that Socialfunds.com reached
to discuss the upcoming proxy vote on political accountability either didn’t respond to interview
requests or declined to release their boards’ suggestions until proxy statements are released to
shareholders. Likewise, the trade associations reached by Socialfunds.com gave no comment at this
The shareholders working with the CPA are asking companies to recognize that the
disclosure of political activity is a matter of good corporate governance and good business.
Shareholders aren’t asking companies to stop giving, but rather to simply show, in a
straightforward manner, where and how money from the corporate treasury is being spent. With
hundreds of millions of dollars being sent to trade associations yearly, shareholders want to
pierce the veil that is currently drawn over corporate donations to trade associations.