Did you see how many comments have been received on the rulemaking petition submitted to the SEC by a group of academics about political disclosure spending last summer? Over 250,000! Most are form letters but 500 are unique, which is still very high for a petition. Remember this is not a SEC rulemaking! The bizarre thing is that this development doesn’t quite jibe with the fact that shareholder proposals on this topic have not received overwhelming support by shareholders so far this proxy season (on average about 27%, per this blog).
Anyways, I attended an interesting conference from The Conference Board about corporate political spending last week. Like I imagine for many of you out there, this is an area that I confess to not know much about – but needed to get up-to-speed fast given how it’s the hottest topic of the proxy season and not one that is likely to die down anytime soon. But it’s not just hot for the proxy season – it’s hot for the masses. Here are notes from a panel of journalists that bear this out:
Eliza Newlin Carney from Roll Call was rubbing her hands about what a good story corporate political spending is: lots of big numbers that people are interested in: money, power, lots of people interested in outcomes – what she called “a perfect storm” – probably making a lot of the company attendees rather worried. Peter Cook from Bloomberg asked some good questions and affirmed that he gets thousands of interested comments on his stories on the subject, a level he said was high.
Tom Hamburger from the Washington Post professed a desire to hear more from the audience, and said any “progress” on disclosure was probably illusory because it still lacks bipartisan support and that identified leaders in the area of disclosure are still able to direct money to secret efforts, as evidenced by the action of several health insurers to provide money to the Chamber of Commerce to defeat Obamacare.
All the journalists agreed corporate money in politics was going to keep them employed on the beat for a very long time. Also, Trevor Potter wrapped up with an assessment of the DC Circuit Court decision on the Van Hollen v. FEC case. Potter thought the Supreme Court would probably come down on the side of disclosure and not agree to hear any appeal that might be lodged.
Over the course of the day, I became more familiar with ALEC (American Legislative Exchange Council) and ALECexposed.org. I thought it was interesting that not much was said about the popular discontent with corporate influence, a la Occupy Wall Street. My favorite panel involved the topic that might matter the most – what is the board’s role in all of this? Let me know what you think about that…
Does Corporate Political Spending Belong in SEC Disclosure Documents?
The movement to require companies to disclose their corporate political activities is not a new one. It goes back decades as a bill seeking that is floated nearly every year as far back as I can remember. Of course, this notion never had the type of popular support that it now enjoys in the post-Citizens United era. The question remains – is this type of disclosure appropriate for filings made with the SEC or should it be mandated through another avenue?
On the one hand, the purpose of disclosure filed with the SEC is to enable investors to make investment decisions. There are cogent arguments that corporate political spending disclosure is meaningful to investors because they would be able to see if a company is doing something that can blow up its reputation – something that can happen fast in today’s social media world, particularly with politics as kindling. Boycotts are now much easier to form online and that can hurt a company’s bottom line.
On the other hand, some argue that they have talked to institutional investors and most say they won’t make their investment decisions based on this type of disclosure. Encouraged by the Center for Political Accountability, as noted in this press release, over 100 companies now provide detailed disclosure of their political spending on their websites. Are investors reading those disclosures?
Or is this one of those topics where SEC disclosure is mandated for the social good more than investors? There are plenty of examples of that today – think conflict minerals or global security risk and terrorism – or even go back in time to Y2K. This likely will be a debate that will be settled by Congress, as so often happens…
More on our “Proxy Season Blog”
We continue to post new items regularly on our “Proxy Season Blog” for TheCorporateCounsel.net members. Members can sign up to get that blog pushed out to them via email whenever there is a new entry by simply inputting their email address on the left side of that blog. Here are some of the latest entries:
- Norges Bank on Proxy Access
- Research: Who Companies Name As Proxies With Power to Vote Proxies Received
- Corp Fin Allows Companies to Omit Arbitration Proposals
- Western Union Moves to Declassify, But Drops Proxy Access Plan
- Chevedden Submits Brief to Fifth Circuit in KBR Appeal
- Corp Fin Reverses Position on Net Neutrality Proposals
Deal Cube Tournament: Round One; Second Match
As noted in these rules (and keep sending more pics for the next tourney), please vote for two of the following four cubes below:
- Broc Romanek