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Proxy Disclosure Resolutions About Politics, Not Transparency

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This past week, The Huffington Post’s Paul Blumenthal offered up a piece of agitprop masquerading as trenchant political analysis. It seems – well, not seems inasmuch as Blumenthal pretty much declares outright – that he isn’t much of a fan of the U.S. Chamber of Commerce’s antipathy toward shareholder proxy resolutions promoting political spending disclosure policies. Likewise, writes Blumenthal, three other “usual suspects” – the Business Roundtable, the National Association of Manufacturers and The Wall Street Journal – are aligned with the Chamber against all that the left considers right and proper regarding corporate political transparency and disclosure.

In the article, tellingly titled “The Chamber of Commerce Is Fighting Fiercely to Stop the Scourge of Corporate Transparency,” Blumenthal writes as if guided by the hands of the Center for Political Accountability’s Bruce Freed and the religious activists at As You Sow and the Interfaith Center for Corporate Responsibility:

This spring, shareholders in more than 100 companies will introduce resolutions calling for greater disclosure of corporations’ political and lobbying activity. Six major companies — Dean Foods, Eastman Chemical, H&R Block, Marathon Oil, U.S. Steel and Valero Energy — have already reached agreement with New York state Comptroller Thomas DiNapoli, who oversees the third largest pension fund in the nation, to adopt political spending disclosure policies in exchange for the comptroller’s office withdrawing its resolutions.

But don’t consider that a sign that corporate America is learning to live with transparency. Over the past two years, three of the usual suspects – the U.S. Chamber of Commerce, the Business Roundtable and the National Association of Manufacturers – have joined together to try to discredit the purpose of disclosure policies and the advocates calling for them.

Aided by the editorial page of The Wall Street Journal, the three big business groups have sought to undercut activist investors and pro-disclosure groups through public campaigns and private meetings with corporate executives.

Private meetings between business groups and CEOs? An editorial page that dares counter The New York Times, CPA, Bruce Freed and countless nuns, clergy and lay activists? Heaven forefend! But, frankly and quite seriously, I welcome any and all assistance from the above-mentioned groups, and feel a little crushed that Blumenthal didn’t mention me in his list of villains advocating for the right of private political speech as I’ve been doing in this space the past year or so. Nevertheless, Blumethal continues:

The anti-disclosure campaign has particularly targeted the nonprofit Center for Political Accountability. The center publishes the annual CPA-Zicklin Index of Corporate Political Accountability and Disclosure, which ranks major corporations on their political spending and disclosure policies. Judging from their efforts to discredit it, the business lobby groups see a major threat in such a public evaluation of their members’ support for transparency.

Oh, for Pete’s sake! Is it the perception that CPA is a major threat or merely the desire to counter its baseless claims that motivates the Chamber, Roundtable, NMA and my friends over at the Center for Competitive Politics:

In April 2013, the three groups sent their first joint letter to executives at Fortune 500 companies warning them about shareholders presenting disclosure resolutions. “The activists’ goal is to limit or remove altogether the business voice from the political and policymaking processes,” the missive stated.

Another letter was sent in October 2013 with a more detailed warning: “Some unions, environmentalists, public pension fund managers and other political activists, coordinating with the Center for Political Accountability (‘CPA’), have engaged in a campaign with two goals: convince corporate America that 1) investors desire disclosure of ‘political and public policy expenditures’ and 2) most corporations themselves are agreeing to greater disclosure of these expenditures.”

Since then, the Chamber of Commerce has retained the services of former Securities and Exchange Commissioners Paul Atkins and Kathleen Casey, now with Patomak Global Partners, to further spread the word about the allegedly nefarious motives of those seeking corporate political disclosure. In 2014, the Patomak consultants presented the Chamber’s case to a committee of the Securities Industry and Financial Markets Association and at the annual meetings of the National Investor Relations Institute and the National Association of Corporate Directors.

They wielded arguments from the Center for Competitive Politics, a nonprofit opposed to campaign finance regulation and disclosure requirements, and now repeated in the pages of The Wall Street Journal. A PowerPoint presentation made to the SIFMA committee – and obtained by The Huffington Post – took aim at the Center for Political Accountability and its index. It argued that the index is manipulated, that even receipt of a high score would not deter future shareholder resolutions and that the center is a stealth puppet of liberals to end corporate political engagement.

Predictably, Freed defends his index from negative criticism. “There’s one word for that: baloney,” he told Blumenthal. Ahh! The classic lunchmeat defense! Blumenthal continues:

While investors and the Center for Political Accountability have been pushing for greater disclosure for at least a decade, their efforts gained more urgency following the Supreme Court’s 2010 Citizens United decision. That ruling opened the door for corporations to spend unlimited sums on political campaigns so long as they remained legally independent from the candidates they backed.

The Chamber of Commerce had submitted a brief in the Citizens United case in support of lifting certain previous restrictions on corporate spending. The business lobby has been active in elections since 1998, but dramatically stepped up its efforts following the Supreme Court’s ruling. Since then, the Chamber has spent over $100 million on federal elections, almost all in favor of the Republican Party.

And there you have it in a nutshell. Corporate funding might be used to support candidates and causes opposed by left-leaning shareholder activists – regardless whether those candidates and causes are in the best interests of the company and its shareholders. In other words, it’s a political agenda, which also was noted by James R. Copland, director of the Center for Legal Policy at the Manhattan Institute last week in the pages of The Wall Street Journal, echoing similar comments he wrote in MICLP’s Spring 2015 ProxyMonitor:

Until 1970, the [Securities and Exchange Commission] had a rule that companies could exclude from proxy ballots any shareholder resolution introduced ‘for the purpose of promoting general economic, political, racial, religious, social or similar causes.’…

Last year, according to the Manhattan Institute’s ProxyMonitor.org database, 47% of all shareholder resolutions on the proxy ballots of the largest 250 American companies by revenues involved social or policy concerns unrelated to share value. The issues included corporate political spending, environmental issues and animal rights. Since 2006, these companies have faced 1,150 such proposals, and 65 more have already been introduced in 2015….

The SEC’s legal mandate is to protect investors, facilitate capital formation, and promote efficient markets. Allowing social and policy issues to dominate corporate annual meetings conflicts with these goals. Here’s hoping that the agency revisits this issue and removes politics from proxy process, for good.

I could not agree more. It’s time for religious shareholder activists to realize their pursuit of what they perceive as social justice is nothing more than blackmailing companies to cave to their political whims.

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Bruce Edward Walker has more than 30 years’ writing and editing experience in a variety of publishing areas, including reference books, newspapers, magazines, media relations and corporate speeches. Much of this material involved research on water rights, land use, alternative-technology vehicles and other environmental issues, but Walker has also written extensively on nonscientific subjects, having produced six titles in Wiley Publishing’s CliffsNotes series, including study guides for "Alice’s Adventures in Wonderland" and "One Flew Over the Cuckoo’s Nest." He has also authored more than 100 critical biographies of authors and musicians for Gale Research's Contemporary Literary Criticism and Contemporary Musicians reference-book series. He was managing editor of The Heartland Institute's InfoTech & Telecom News from 2010-2012. Prior to that, he was manager of communications for the Mackinac Center's Property Rights Network. He also served from 2006-2011 as editor of Michigan Science, a quarterly Mackinac Center publication. Walker has served as an adjunct professor of literature and academic writing at University of Detroit Mercy. For the past five years, he has authored a weekly column for the mid-Michigan Morning Sun newspaper. Walker holds a bachelor’s degree in English from Michigan State University. He is the father of two daughters and currently lives in Flint, Mich., with his wife Katherine.

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