June 05, 2012
Shareowners to Vote on Lobbying by Energy Companies
by Robert Kropp
Resolutions submitted by Walden Asset Management at Devon Energy and Chesapeake Energy call for
disclosure of corporate lobbying expenditures.
More than $1 billion was spent by corporations in 2010 on efforts to influence the political
process. Investors collaborating with the Center for Political Accountability (CPA) have
made some inroads in pressuring corporations to disclose their political spending activities—CPA
announced in March that 100 companies have now adopted disclosure and board oversight of such
expenditures—but 80% of S&P 500 companies engage in lobbying. Lobbying expenditures accounted for
$979 million, or 87%, of corporate political spending in 2010.
A coalition of 40
sustainable investors, led by Walden
Asset Management, has filed resolutions addressing lobbying expenditures at 40 companies this
year. Tim Smith, Director of Environmental, Social and Governance (ESG) Shareowner Engagement at
Walden, stated, "It is important for investors to understand how company dollars are spent to
influence our laws and regulations by lobbying activities. We believe it is timely and appropriate
for companies to be much more transparent."
Resolutions at two energy companies—Devon
Energy and Chesapeake Energy, both headquartered in Oklahoma, will be voted on this week. The
resolution at Devon Energy states, "Absent a system of accountability, company assets could be used
for policy objectives contrary to a company's long-term interests posing risks to the company and
shareholders." For example, the resolution continues, "Devon is actively involved in the American
Petroleum Institute & National Association of Manufacturers, both very active lobbyists."
Devon Energy sought to have the SEC allow it to omit the resolution from its proxy statement,
arguing that it was vague and misleading, and would result in the micromanagement of the company by
investors. The SEC disagreed, stating, "The proposal focuses primarily on Devon Energy's general
political activities and does not seek to micromanage the company to such a degree that exclusion
of the proposal would be appropriate."
"While this resolution focuses primarily on
lobbying disclosure rather than seeking information on direct and indirect political spending to
influence elections, further research discovered the facts that Devon had spent $6.13 million for
federal lobbying from 2007 to 2011," Smith stated, "But more revealing is the fact that half of its
federal spending went to 527 political committees all of which were channeled to Republicans."
"In particular, American Solutions for Winning the Future, organized in 2007 by Newt Gingrich
to promote his particular political proposals and agenda, received $500,000 from Devon Energy,"
Smith continued. "This set the stage for his Presidential run, and by mid 2011 raised $50 million."
"How did Devon think such contributions promoted shareholder interests and built
shareholder value?" he asked.