The Center for Political Accountability’s shareholder resolution for corporate political disclosure and accountability secured record high support in the 2015 proxy season. With 22 votes cast by late July, the average vote was 35 percent in favor of corporate political disclosure.
This was the highest average since the Center issued its model resolution in the 2004 proxy season and the sixth year in a row where the average vote was 30 percent or higher.
Shareholders registered their support for transparency with 40 plus percent votes for CPA’s model resolution at six companies: Waste Management, 47 percent, Raytheon Co., 45.9 percent, PPL Corp., 44.6 percent, Nisource Inc., 44.5 percent, Western Union, 41.5 percent, and Cabot Oil and Gas, 41.28 percent. Two companies were just shy of 40 percent: NextEra Energy at 39.6 percent and Ryder System at 39 percent.
Overall, proxy votes available at press time showed 16 disclosure resolutions – or nearly 75 percent – that received support exceeding 30 percent.
“With anonymous political spending soaring, shareholders are casting high votes for political transparency,” said Bruce Freed, CPA president. “They recognize that secret political spending poses an even greater threat.” Freed said the votes show continuing momentum for political disclosure and accountability resolutions.
For the disclosure votes exceeding 40 percent, the shareholder group sponsors were New York State Common Retirement Fund (Waste Management, Raytheon, Nisource, Western Union) and New York City Employee Retirement System (PPL, Cabot Oil and Gas).
Founder's Column by Bruce Freed
CVS Health should have known that the U.S. Chamber of Commerce has been fighting anti-smoking laws globally in concert with the tobacco industry.
But CVS apparently didn’t know. “We were surprised to read recent press reports concerning the U.S. Chamber of Commerce’s position on tobacco products outside the United States,” a senior CVS vice president, David R. Palombi, said earlier this month. He said CVS Health was resigning from the Chamber, according to the New York Times, not long after that newspaper had exposed the Chamber’s activity.
“CVS Health’s purpose is to help people on their path to better health, and we fundamentally believe tobacco use is in direct conflict with that purpose,” Palombi added. Last year, the company halted sales of tobacco products in its drug stores.
When companies don’t press for full disclosure of what their trade association is doing and how it’s using their money, this kind of misalignment between trade group and member businesses can occur.
Good corporate governance should lead companies to ensure that their trade associations do not engage in activities, and use their funds, in ways that
may damage the company's reputation or are at odds with its stated public policy and business objectives. When misalignment occurs, it can carry serious bottom-line risks for companies.
While CPA’s mission is devoted to transparency and accountability for corporate political spending, the same lessons apply to payments made to a trade association for lobbying, as this recent episode makes clear.
We wrote the following (with help from colleagues) in the Handbook on Corporate Activity, published by The Conference Board in 2010, and it can apply to trade association payments for lobbying as well:
“Most trade associations shun controversial political activity. But given the relative freedom trade associations have to engage in political activity, it may be advisable for companies to inquire about how their own payments to trade associations are spent. Without this information about how its contributions are spent, a corporation may unwittingly end up supporting politicians or political causes with which the company may not want to be associated. It may also find its funds being used to promote positions that may not be aligned with its values or business strategies.”
The Chamber of Commerce said in a statement, “It’s unfortunate that a concerted misinformation campaign about the U.S. Chamber’s position on smoking has resulted in a company leaving our organization.”
“To be clear, the chamber does not support smoking and wants people to quit,” the statement said. “At the same time, we support protecting the intellectual property and trademarks of all legal products in all industries and oppose singling out certain industries for discriminatory treatment.”
We’re proud that CPA was quoted in an article on this topic published by VICE News, a global news channel.