November 7, 2023
CPA-Zicklin Index: S&P 500 Lightyears Ahead of Remaining Russell 1000
In a moment of prescience, last week, Liz wrote that this year’s CPA-Zicklin Index “will be published any day” and indeed it came out the very next day. As a reminder, the CPA-Zicklin Index, a collaboration between the Center for Political Accountability (CPA) and The Carol and Lawrence Zicklin Center for Business Ethics Research, has been benchmarking political spending since the Citizens United decision in 2010. As Liz noted, the Index expanded to cover Russell 1000 companies last year in addition to the S&P 500.
In this year’s Index, what stood out for me is just how far ahead the S&P 500 is from the remaining Russell 1000 companies. Here are some stats:
– 78% of S&P 500 companies fully or partially disclosed their political spending in 2023 or prohibited at least one type of spending; for Russell 1000 companies that do not belong to the S&P 500, levels of disclosure are low and prohibitions on types of political spending are limited
– 63% of the S&P 500 have board oversight of political spending; for Russell 1000 companies that do not belong to the S&P 500, that number is only 14%
But not all S&P 500 companies with board oversight cover all the bases. Some companies in the S&P 500 with board committee review of direct political contributions and expenditures still don’t have board committee review of spending through third-party groups, including payments to trade associations and other tax-exempt organizations. For purposes of the Index, that is particularly concerning since those organizations are not required to publicize their donors.
The summary also highlighted the over 10-point difference in scoring between companies who were formally engaged with a proposal and settled versus those that did not:
Of full S&P 500 companies, 234 have been formally engaged by shareholders with a resolution on the issue of corporate political spending disclosure and accountability since the 2004 proxy season. Of these companies, 158 have reached agreements with shareholders. For companies with an agreement, the average overall Index score is 78.6 percent, as compared to 67.5 percent for the 76 companies that were engaged but did not reach an agreement. The average score for the 262 companies that have no history of shareholder engagement is 43.3 percent.
– Meredith Ervine