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February 23, 2013
Lawsuit Dropped after Chip Maker Updates Political Spending Policy
    by Robert Kropp

After the New York State Comptroller filed suit in Delaware, Qualcomm updates its policy on political spending to include disclosure of payments to trade associations and social welfare organizations.


Following the most expensive Presidential election in American history, shareowners have prepared for the 2013 proxy season by filing record numbers of resolutions addressing corporate political spending and lobbying expenditures. The recently published 2013 Proxy Resolutions and Voting Guide reports that members of the Interfaith Center on Corporate Responsibility (ICCR) alone have filed 52 resolutions addressing the issues.

In 2012, more than 100 shareowner resolutions requesting disclosure of political spending were filed.

According to the Center for Political Accountability (CPA), more than 100 large publicly held companies have agreed to adopt policies addressing disclosure and board oversight of their political spending activities. And Securities and Exchange Commission (SEC) officials suggested after the election that the Commission is considering a rule requiring disclosure.

In the absence of regulatory mandates, shareowners have for the most part relied on engagement and the filing of resolutions to pressure companies to disclose. But earlier this year, Thomas DiNapoli, the New York State Comptroller and trustee of the New York State Common Retirement Fund, took a different tack, filing suit against computer chip manufacturer Qualcomm in a Delaware court.

"We've done shareholder resolutions," DiNapoli told the New York Times in January. "Rather than continue to be rebuffed, we're taking this new approach."

On Friday, DiNapoli and Qualcomm issued a press release announcing that an agreement on disclosure has been reached and the lawsuit dropped. As a result of the agreement, Qualcomm has updated its Political Contributions and Expenditures Policy to include disclosure of payments to trade associations and tax-exempt Section 501(c)(4) organizations.

Section 501(c)(4) organizations are defined by the Internal Revenue Service (IRS) as social welfare organizations that provide public or community benefits. But one such organization, Karl Rove's Crossroads GPS, rivaled the Obama and Romney campaigns in the amount of money spent on last year's election.

Qualcomm's revised policy reveals that it made payments totaling $90,000 to Section 501(c)(4) organizations during the 2012 fiscal year, and contributed $1 million to the Committee for a Responsible Federal Budget (CRFB). CRFB runs the controversial Fix the Debt campaign, which is described by the Institute for Policy Studies as "promoting a rash of corporate tax breaks as part of what they call 'pro-growth tax reform.'"

Qualcomm also made payments totaling $385,000 to the US Chamber of Commerce in 2012.

Following the agreement, Qualcomm's score on the CPA-Zicklin Index of Corporate Political Accountability and Disclosure increased from 22% to 88%. "Qualcomm's new disclosure policy puts it near the top of the CPA-Zicklin Index of Corporate Political Accountability and Disclosure," said Karl Sandstrom, the General Counsel for CPA.

"Qualcomm's disclosure policy sets a high standard for transparency in corporate political spending disclosure and the company deserves praise for its actions," DiNapoli said. "This is a significant milestone in greater transparency in corporate political spending."

"Qualcomm agrees with the New York State Common Retirement Fund that increased transparency for election-related activities by corporations is very beneficial," Paul Jacobs, CEO and Chairman of Qualcomm, said.

 

 
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