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July 03, 2012
Shareowners Await Support from Legislators and Regulators in Addressing Corporate Political Spending
    by Robert Kropp

As support for resolutions requesting disclosure of corporate political spending increases, efforts to address the issue on a macro level are stirring but are unlikely to affect 2012 elections.

Shareowner resolutions addressing corporate political expenditures have gained unprecedented support during this proxy season, as investors concerned about the risks to corporations of unregulated political spending have filed more than 100 such resolutions. And in what amounts to a rebuke of the US Supreme Court's Citizens United decision, proxy votes exceeding 40% have been recorded in the ballots of at least six corporations thus far.

At WellCare, a health insurance company, a resolution co-filed by Amalgamated Bank and the Comptroller of the City of New York gained almost 53% of shareowner votes, the second year in a row in which a resolution addressing political spending won majority support.

The resolution filed at WellCare, as well as at 24 other corporations whose annual general meetings had been held by June 7th, is based on a model resolution developed by the Center for Political Accountability (CPA). More than half of the 25 resolutions gained in excess of 30% support; and at 12 of the 18 companies where resolutions were resubmitted after 2011, support for the proposals increased.

Overall, CPA reports, 51 resolutions were filed this year using its model. Of those, 13 were withdrawn after engagement by shareowners led to an agreement with the companies.

The work of CPA and its allies would be made much easier, of course, if legislative and regulatory action were taken to address the issue. A petition filed with the Securities and Exchange Commission (SEC), calling on it to mandate disclosure of political spending by all corporations, has attracted at least 70,000 letters of support.

Calling Citizens United "a major blow to American democratic traditions," Sen. Bernard Sanders of Vermont has proposed a constitutional amendment affirming "the authority of Congress and the States to regulate corporations and to regulate and set limits on all election contributions and expenditures."

And as reported in The New York Times recently, Attorney General Eris Schneiderman of New York has issued a subpoena to the National Chamber Foundation, a foundation affiliated with the US Chamber of Commerce, in an effort to determine if $18 million in loans to the Chamber were "illegally funneled…for political and lobbying activities."

"The secret world of undisclosed political contributions is in desperate need of sunlight," The Times stated in an editorial on Schneiderman's investigation. "Public corporations are giving money in support of political candidates without any accountability to shareholders or consumers."

However progress may occur, whether through legislative, legal, or regulatory channels, it is unlikely to have much effect on this year's presidential elections. Regaining the "American democratic traditions" referred to by Sen. Sanders will require efforts from many more actors than the sustainable investors and advocated for corporate governance who have met with considerable success at corporate annual general meetings.


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