As reported in The Dallas Morning News and featured in Monday’s NACD Directors Daily, more than 80 percent of Americans believe there should be limits on the amount of money corporations can contribute to groups trying to influence political campaigns. More than two years after the U.S. Supreme Court’s Citizens United ruling, corporate political spending remains under scrutiny, and shareholder resolutions regarding the disclosure of political activity make up the largest portion of environmental and social policy proposals. While the number of political proposals has doubled since 2008, they have leveled off since 2011, with 116 proposals filed in 2012 to date. The average level of shareholder support for these proposals, depending on company size, sits at low to mid 20 percent, higher than the average of 18 percent support for environmental or social policy proposals.
Most shareholder proposals request disclosure of political or lobbying spending, while a small number of proposals seek to actively limit these corporate expenditures. The latter group either seeks advisory votes on political spending (averaging 7 percent support) or calls for a stop to all political spending (averaging 3 percent support).
Research studies are inconclusive regarding the effects of corporate political expenditures on shareholder value. A number of studies have found positive correlations between political contributions or lobbying activity and benefits to economic and shareholder value. Within the last few years; however, three new studies have found negative correlations, claiming that corporations involved in political spending suffer from decreased shareholder value or under perform their peers.
This proxy season, the Center for Political Accountability (CPA) submitted 51 political disclosure proposals, making it the most active shareholder activist group in this regard. It has also released its model resolution template for 2013, which may be, if this year’s trends continue, the most frequently employed political disclosure proxy proposal. On last week’s episode of BoardVision, NACD spoke with Ken Gross, head of the Political Law practice at Skadden Arps, who provided directors with insights on these shareholder proposals.
Interested directors may wish to view CPA’s 2013 Model Resolution Template.