Strong Votes Last Year Lead Companies to Adopt Political Disclosure This Year
Sixteen new companies from across the corporate spectrum have adopted political disclosure and accountability so far in the 2013 proxy season, the Center for Political Accountability announced.
The latest companies included WellCare Health Plans, Inc., a health insurer; JPMorgan Chase & Co., the global financial services giant; Southwest Airlines; and Dr. Pepper Snapple Group. It brings to 117 the number of large publicly held companies that have agreed to adopt disclosure since 2003, when CPA and its shareholder partners launched their campaign.
Several of these agreements followed high shareholder votes from previous years’ resolutions. For example, WellCare, which the Amalgamated Bank and the New York City Funds have engaged for the past three years, adopted transparency this year after the resolution captured 52.7 percent of total shareholder support in 2012 and 42.5 percent support in 2011.
“We commend WellCare for its responsiveness and developing a thorough and comprehensive inaugural report,” said Scott Zdrazil, director of corporate governance for Amalgamated Bank, which worked to secure the WellCare agreement. He added, “We think WellCare's report is exemplary by including all payments to trade associations, all 501c4 contributions, and 501c3 organizations that write model legislation, even when the company's payments were zero."
Strong votes on shareholder resolutions last year also preceded this year’s agreements struck by CenturyLink, a telecommunications provider (41.1 percent in 2012 and 34.8 percent in 2011), and Mylan, a pharmaceuticals company (34.8 percent in 2012 and not proposed in 2011).
Trillium Asset Management, LLC, which worked to secure an agreement with CenturyLink, said the company was implementing the most robust political spending disclosure in the telecommunications sector. Trillium said in its announcement: “The telecom industry is now facing critical challenges regarding its control over the free flow of information and calls for greater competition in a highly concentrated market. … As legislators, regulators and other policy leaders wrestle with those challenges, investors and the public have the right to know how corporate dollars are spent to influence the political process.”
Also robust was the agreement from JPMorgan Chase, after a three-year engagement by Domini Social Investments LLC. JPMorgan Chase agreed that it would advise its trade associations not to use company money for electoral purposes, and that it would not engage 501c4 groups for the same activity.
Other companies in the latest round of agreements were Plum Creek Timber Co. and Noble Energy, both working with New York State Comptroller Thomas P. DiNapoli; Biogen-Idec Inc., working with Responsible Wealth; Lowe's Cos., working with the New York City Office of the Comptroller; and Qualcomm, the result of a lawsuit settlement with the New York State Comptroller.
For a complete list of the 16 companies with shareholder agreements mentioned in this article, please click here.
About 35 resolutions asking companies to adopt political spending transparency await shareholder votes at this time. The first of such resolutions was voted on on April 25, at Humana, with results to be released in upcoming weeks.
Founder's Column: Setting the Record Straight
By Bruce Freed, CPA President
The CPA-Zicklin Index of Corporate Political Accountability and Disclosure is only two years old. For its credibility, it has already earned high marks.
The Index serves several purposes, from a template for best practices for disclosure and accountability to a neutral measure accepted by the news media and a kind of early warning system for corporations. As this newsletter reported last month, a veteran campaign finance attorney went so far as to commend the Index publicly, saying it can prove valuable for companies concerned they may be targeted over political spending disclosures.
It’s not surprising, then, that some groups opposed to corporate political transparency are unhappy about the Index and about a continuing wave of shareholder resolutions to persuade more companies to disclose their political activity.
This month, the Wall Street Journal reported on a letter signed by the presidents of three major national business associations opposing greater disclosure, criticizing its advocates and also assailing the CPA-Zicklin Index. The criticism came from the National Association of Manufacturers, the U.S. Chamber of Commerce and the Business Roundtable.
Most of the critics’ arguments aren’t new. But I must clarify facts on several fronts.
First, several changes in the methodology of the Index were made between the first and second annual reports in response to questions and concerns raised by companies that we engaged. Companies comment regularly to CPA and we listen seriously to them.
Second, the standards and procedures in the Index initially were developed by respected academics. They have reviewed our work and stand by it. We seek their advice on an on-going basis.
And lastly, as the Wall Street Journal quoted me saying, the business associations “grossly misrepresent the strong support” from shareholders for persuading companies to disclose their political spending. The Center follows the Securities and Exchange Commission’s method for calculating shareholder support for resolutions, which the agency uses to determine eligibility for resubmitting resolutions. It includes only the number of votes cast for and against and excludes abstentions.
On that last point, I’d like to quote from a Bloomberg article on April 25: “Political-activity resolutions generated more shareholder votes last year than any other topic, including efforts to separate the roles of chief executive and chairman.”
Notwithstanding the criticisms, the Index is now recognized as an important, objective benchmarking tool that is helping companies and investors assess how a company is handling its political spending.