Shareholders are hitting a wall with some major companies in their effort to persuade them to disclose how they spend corporate money to support political candidates.
Recent years have seen a surge in shareholder proposals demanding that companies disclose their political spending.
While many firms have opened their books on the matter, there remain several holdouts, and regulations don’t require that the information be released, report CFO Journal’s Vipal Monga and Maxwell Murphy.
According to the Center for Political Accountability, at least one in 10 big publicly traded companies doesn’t reveal details of its donations to electoral candidates, parties or causes on its website, where investors could easily find it.
Charles Schwab Corp. is among the holdouts and only offers a general statement on its website that says it complies with all disclosure laws and that its board’s audit committee reviews political donations.
“The cost and effort to compile and report this data would outweigh its limited value to our stockholders,” Schwab said this year in response to a disclosure proposal.
Some major corporations are increasingly disclosing their political spending this election year.
The annual index of corporate political spending by the Center for Political Accountability shows that a majority of nearly 200 publicly held companies received higher ratings for disclosure this year compared with 2013.
"More leading companies are establishing political disclosure as a mainstream corporate practice," said Bruce Freed, president of the group, which conducts the annual survey in conjunction with the Zicklin Center for Business Ethics Research at the University of Pennsylvania.
The study examines policies and practices of disclosure on the websites of leading corporations. This year 20 companies received top rankings for disclosure and accountability. Two companies, CSX Corp. and Noble Energy Inc., received the top score ever awarded. Several others, including Blackrock Inc. and Schlumberger Ltd., were cited for showing "greatest improvement" in making political spending information public.
"The transparency and disclosure movement is growing," said Charles Kolb, a former White House domestic policy advisor under George H.W. Bush, who sits on the board of the CPA.
The survey this year looked at disclosure by the top 300 companies on the Standard & Poors 500 list, up from 200 firms surveyed last year. Of the firms studied, sixty percent disclosed at least some spending on behalf of candidates, parties and political committees. Nearly half described their membership or payments to politically active trade associations, such as the U.S. Chamber of Commerce.
The Chamber and allied national business groups are wary of the new pressure for donor disclosure, whether mandated by Congress, the courts or shareholders. One of the biggest spenders on elections, the Chamber has long refused to disclose details of its corporate donors, saying identification would lead to harassment and intimidation.
"What they really want is to silence viewpoints they don't like in order to have one-sided conversation with the America people in the public square," Chamber of Commerce President Tom Donohue said in a speech last year. "The aim to do this by regulating speech they don't like and intimidating speakers they don't agree with," Donohue said.
The Securities and Exchange Commission has received petitions and letters urging it to require publicly traded companies to disclose their political spending. The push for transparency has grown since 2010, when the U.S. Supreme Court rolled back restrictions on political spending by corporations, associations and labor unions. Although once a bipartisan cause, the current disclosure campaign has been led mostly by Democrats and groups on the left.
The study gives top ratings to 20 firms, among them Microsoft Corp., Morgan Stanley, Merck & Co., Inc., Qualcomm, Inc., and Time Warner, Inc. The survey does not include any judgments about a company's political spending or whether its disclosure is complete.
The Center for Competitive Politics criticized the newly released index as a “flawed and partisan measure of corporate accountability.”
“Corporations have an obligation to do what is in the best interest of their shareholders, not comply with the demands of a non-profit that opposes speech by the business community,” said CCP Chairman Brad Smith, former Federal Election Commission Chairman.
Smith also said it was "important to recognize the implications of activist investing and dragging the SEC into politics. CPA has no obligation to worry about the actual interests of shareholders, and nothing suggests that they have the best interest of the business community at heart.”
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