Bloomberg BNA’s Corporate Law & Accountability Report is available on the Corporate Law Resource Center. This news service keeps corporate practitioners informed of legal developments of...
June 29 — A resolution requesting that a company disclose its political spending has received majority shareholder support, for the first time in 11 years, a report scheduled for release June 30 said.
The report, published by the Manhattan Institute for Policy Research, said that 52 percent of shareholders at Irving, Texas-based engineering conglomerate Fluor Corp. supported the proposal at the company's May 5 annual meeting, despite Fluor's opposition.
This is the first time that a majority of shareholders has approved a proposal on politics-related spending over management's opposition since 2006, when the institute's Proxy Monitor database started tracking investor proposals at Fortune 250 companies, the report said.
The report also found that over the last decade, shareholder proponents have shifted towards submitting more proposals related to lobbying activities, and less to direct political spending.
Fluor's proposal, submitted by Philadelphia's Public Employees Retirement System, requested that the company disclose its policies and procedures “for making, with corporate funds or assets, contributions and expenditures (direct or indirect) to (a) participate or intervene in any political campaign on behalf of (or in opposition to) any candidate for public office, or (b) influence the general public, or any segment thereof, with respect to an election or referendum.”
Shareholder proposals typically are advisory and do not bind management.
In a statement e-mailed June 29 to Bloomberg BNA, the company said it will continue to discuss the proposal with its shareholders. “We refer interested parties to our proxy statement for the board's statement in opposition to the proposal,” Fluor said. “We currently meet all statutory disclosure requirements and are developing revisions to our policy to comply with the proposal.”
The Manhattan Institute found that between 2006 to 2016, 66 percent of all politics-related shareholder proposals focused on political spending, and 33 focused on lobbying. In the 2015 season, 45 percent involved political spending and in 2016, 33 percent involved political spending, its report said.
“It's been a significant shift away from political spending-focused proposals,” James Copland, Manhattan Institute legal policy director and senior fellow, told Bloomberg BNA.
Copland said that the shift may track an increase in corporate spending on lobbying activities. Joining lobbying groups such as trade associations is a more efficient way of alerting lawmakers to issues of concern to companies, he said. “Ultimately, Coke and Pepsi have about the same interests.”
Second, companies may be increasing spending on lobbying because when U.S. firms in the same industry pre-commit to funding a trade association, they're assured their competitors won't be “free riders”—benefiting from lobbying activities paid for others, Copland said.
Shareholder proposals relating to political spending significantly increased after the Supreme Court's 2010 ruling in Citizens United v. Federal Election Commission, 558 U.S. 310. The high court majority concluded that political spending is a form of First Amendment protected speech and the government may not keep corporations from spending money to support or denounce candidates in elections.
According to the report, shareholders submitted 19 proposals in 2007 related to political spending. By 2014, that number had increased to 67, it found. By 2016, the only shareholder proposal category to exceed the number of proposals related to political spending was environmental-related issues, the report said.
More generally, the average approval percentage for a proposal related to lobbying activities was 22 percent for the 2015 proxy season and the 2016 season up to June 10, the report said.
The average approval percentage for a political-spending proposal was 25 percent in 2015 and in 2016 up to June 10, it said.
To contact the reporter on this story: Stephen Joyce in New York at email@example.com
To contact the editor responsible for this story: Yin Wilczek at firstname.lastname@example.org
The report will be available at http://www.proxymonitor.org/Forms/2016Finding3.aspx .
Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)