A new piece in the NYT, “Corporations, Vocal About Racial Justice, Go Quiet on Voting Rights,” starts off this way: “As Black Lives Matter protesters filled the streets last summer, many of the country’s largest corporations expressed solidarity and pledged support for racial justice. But now, with lawmakers around the country advancing restrictive voting rights bills that would have a disproportionate impact on Black voters, corporate America has gone quiet.” The author is talking about new voting laws just passed in Georgia and the reluctance, with some exceptions, of the largest corporations to say anything or do anything—beyond anodyne statements of support for voting rights in general—that might pressure the state to back down, as major corporations did when several states passed their infamous transgender bathroom bills and many companies threatened to move business out of those states. As the NYT observed, the “muted response—coming from companies that last year promised to support social justice—infuriated activists, who are now calling for boycotts.” Last night, the NYT reported that two of the largest corporations in Georgia have abruptly reversed course and issued statements in opposition to the voting bills after a large group of prominent Black business leaders called on companies “to publicly oppose a wave of similarly restrictive voting bills that Republicans are advancing in almost every state.” In an interview with the WSJ, one of those business leaders emphasized that this “is a nonpartisan issue, this is a moral issue.” This battle is expected to continue as other states enact similar legislation, not to mention potential fights over guns, immigration and climate, to name a few. How do companies navigate the terrain of political activity and public scrutiny while staying true to their core values? In this new report, “Under a Microscope: A New Era of Scrutiny for Corporate Political Activity,” The Conference Board attempts to address this complicated issue.
Issues regarding political donations have been thrown into sharp relief recently in light of the stands taken by a number of companies to pause or discontinue some or all political donations in response to the shocking events of January 6. A number of companies announced that their corporate PACs had suspended—temporarily or permanently—their contributions to one or both political parties or to lawmakers who objected to certification of the presidential election. But how widely adopted was this approach? To find out, The Conference Board conducted a survey. It turns out that those announcements reflected only a slice of the actions taken by corporate PACs. What’s more, the survey indicated that corporate boards typically had little role in these decisions. Nevertheless, for some companies, boards may find that political spending associated with their companies is front and center this proxy season.
Who else but Delaware Chief Justice Leo Strine would bid his farewell to the Delaware bench with nothing less ambitious than a “comprehensive proposal to reform the American corporate governance system” laid out in a paper with longest title of any in recorded history: “Toward Fair and Sustainable Capitalism: A Comprehensive Proposal to Help American Workers, Restore Fair Gainsharing Between Employees and Shareholders, and Increase American Competitiveness by Reorienting Our Corporate Governance System Toward Sustainable Long-Term Growth and Encouraging Investments in America’s Future”? Strine offers up his always interesting ideas: for example, he advocates setting up board committees focused on the welfare of the workforce, imposing a tax on most financial transactions to be dedicated to funding infrastructure and research, curbing corporate political spending in the absence of shareholder approval and enhancing the fiduciary duties of institutional investors to consider their ultimate beneficiaries’ economic and human interests. And here’s another idea: Strine believes that the number of proxy votes each year is an “impediment to thoughtful voting” and leads to outsourcing of voting decisions by institutional investors to proxy advisory firms. Say on pay every four years? He has a plan for that too.
A new bill that has been introduced in the House, H.R. 1053, would direct the SEC to issue regs to require public companies to disclose political expenditures in their annual reports and on their websites. While the bill’s chances for passage in the House are reasonably good, that is not the case in the Senate. In the absence of legislation, some proponents of political spending disclosure have turned instead to private ordering, often through shareholder proposals. So far, those proposals have rarely won the day, perhaps in large part because of the absence of support from large institutional investors. But that notable absence has recently come in for criticism from an influential jurist, Delaware Chief Justice Leo Strine. Will it make a difference?
CPA-Zicklin Index for 2016 shows companies increase disclosure, oversight and restrictions regarding corporate political spending
by Cydney Posner In light of our proximity to election day — finally — it seemed like a good time to take a look at the CPA-Zicklin Index of Political Disclosure and Accountability, just released for 2016, which annually evaluates corporate practices and disclosure regarding political spending. In a record-breaking year […]
Prohibition on political spending disclosure requirement survives in omnibus spending bill, WSJ reports
by Cydney Posner The WSJ is reporting that the provision prohibiting the SEC from adopting requirements for political spending disclosure has survived as part of the omnibus spending bill (12/15 text ). (See this PubCo post.) Not that the SEC was addressing the issue anyway. More specifically, Section 707 of the bill […]
House aims to stop SEC from requiring political spending disclosure — companies increasingly “volunteer” spending information
by Cydney Posner It may seem early to you to be thinking about Christmas, but not to Congress. In fact, it’s just that time of year again when Congress uses annual appropriations bills as a Christmas tree for all of its favorite ornaments. In this year’s financial services spending bill, […]