Gaining Momentum: Number of Companies Adopting Political Disclosure Hits 31
Washington, D.C. – Shareholder activists announced today that 12 new companies have adopted political disclosure and accountability policies, boosting the number to 31. This represents a 63% jump in the past two and a half months.
Aetna (NYSE: AET), Colgate-Palmolive (NYSE: CL), E.I. du Pont de Nemours and Company (“DuPont”) (NYSE: DD), FirstEnergy (NYSE: FE),Pfizer (NYSE: PFE), WellPoint (NYSE: WLP) and Xcel Energy (NYSE: XEL) have agreed to report their trade association payments used for political purposes as part of their overall disclosure of political spending with corporate funds. CIGNA (NYSE: CI), Chevron (NYSE: CVX), EMC (NYSE: EMC),General Motors (NYSE: GM) and Lockheed Martin (NYSE: LMT) have adopted disclosure of their soft money political contributions. All of the companies have agreed to board oversight of their political spending.
In addition, 3M (NYSE: MMM) has committed to limited disclosure of its soft money contributions, and 3M, Dominion Resources (NYSE: D) andLimited Brands (NYSE: LTD) have agreed to dialogues with shareholders on disclosure of their trade association political spending.
The groups, Washington-based Center for Political Accountability, five New York City pension funds — the New York City Retirement System, New York City Teachers Retirement System, New York City Police Pension Fund, New York City Fire Department Pension Fund and New York City Board of Education Retirement System; Trillium Asset Management, Walden Asset Management, Green Century Capital Management, Boston Common Asset Management, Calvert Funds, and Mercy Investment Program, are part of a nationwide campaign to bring transparency and accountability to company political spending.
The 12 companies join 19 others that agreed to disclosure and board oversight of political expenditures during the 2005, 2006 and 2007 shareholder resolution seasons. Those companies are General Electric (NYSE:GE), Hewlett-Packard (NYSE: HPQ), American Electric Power (NYSE: AEP),Home Depot (NYSE: HD), Bristol-Myers Squibb (NYSE: BMY), Staples (NASDAQ: SPLS), Amgen (NASDAQ: AMGN), McDonald’s (NYSE: MCD), Southern (NYSE: SO), General Mills (NYSE: GIS), Morgan Stanley (NYSE: MWD), Johnson & Johnson (NYSE: JNJ), Schering-Plough(NYSE: SGP), PepsiCo (NYSE: PEP), Coca Cola (NYSE: KO), Eli Lilly (NYSE: LLY), Verizon (NYSE:VZ), Monsanto (NYSE:MON), and General Dynamics (NYSE:GD).
In agreeing to disclose the portion of their payments made to trade associations that are used for political and lobbying purposes, Aetna, DuPont, Pfizer, Xcel Energy, FirstEnergy and WellPoint said they will seek to obtain the information from trade associations receiving more than de minimis annual dues or payments from the companies.
Colgate-Palmolive, which prohibits political contributions made with corporate funds, pledged to prohibit trade associations from using its payments for political expenditures. To monitor this prohibition, the company said it will request annual reports from trade associations receiving more than de minimis annual payments from company. The requested reports will cover any political and lobbying expenditures made with the company’s payments. Colgate will report to shareholders on this effort.
With these actions, 11 companies have committed to disclosing both soft money and trade association political spending. The others are General Electric, Hewlett-Packard, American Electric Power and General Dynamics. Previously, company disclosure and accountability was limited to political contributions made with corporate funds, popularly known as soft money.
“These additions move political disclosure and accountability much closer to becoming a best corporate governance practice,” said CPA co-director Bruce F. Freed. “The 11 companies are to be congratulated for providing leadership on this critical issue.”
William C. Thompson, Jr., New York City Comptroller and investment advisor to the City’s five pension funds, said, “Disclosure is needed to ensure that corporate assets are not used to finance objectives that are detrimental to the interests of companies and their shareholders.”
According to Andrew Shalit, Green Century’s Director of Shareholder Advocacy, “Companies usually resist requests from shareholders, but in this case every company that Green Century has approached over the last two years has adopted the requested policies. That tells me this is a simple matter of good governance that every company should adopt.”
“The campaign reduces the risks of unmanaged political spending at individual companies,” said Bennett Freeman, Senior Vice President of Social Research and Policy at Calvert, “but also protects Calvert as a universal investor by helping to ensure that companies are playing by the rules and not undermining elements of the regulatory system designed to safeguard the interests of investors.”
Valerie Heinonen, consultant for corporate social responsibility, Sisters of Mercy-Detroit and Mercy Investment Program, said, “Conversations with Aetna and WellPoint began with agreement on good corporate governance practices and transparency, which made carrying out the disclosure and oversight requests the next logical step.”
Lauren Compere, Director of Shareholder Advocacy, Boston Common Asset Management, said, “We are delighted by Colgate-Palmolive’s response. Its policy related to trade associations has pushed the company into a leadership position on political contributions.”
Current campaign finance law allows corporations to make donations in many states and to political committees commonly known as 527s, but not to federal candidates. However, companies aren’t required to disclose political contributions made with corporate funds or payments made to trade associations that are used for political purposes. Moreover, associations aren’t required to disclose the specifics of their political spending or their membership. This secrecy leaves institutional investors and individual shareholders in the dark about the use of company resources for political activities.
CIGNA, a health insurer; Chevron, the second largest U.S. integrated oil company; EMC, an information management and storage company, and Lockheed Martin, the world’s largest defense contractor and a leading information technology company, adopted their policies following discussions with five New York City pension funds which also had a dialogue with Limited Brands.
Aetna and WellPoint-both leading health insurers-adopted their policies following discussions with two Sisters of Mercy investment programs. Major utilities FirstEnergy and Xcel Energy adopted their policies after discussions with Green Century Capital Management. DuPont, the number three US chemical maker, and Dominion Resources were in discussions with Trillium Asset Management.
Calvert Funds led discussions with Pfizer, the world’s largest research-based pharmaceuticals firm. Oral care products leader Colgate-Palmolive worked with Boston Common Asset Management. Walden Asset Management led the dialogue with 3M.
In its Hidden Rivers report released in May 2006, the Center found that trade associations helped companies conceal and spend over $100 million in corporate funds in 2004. This spending, the report noted, poses serious risks to company economic interests and reputations and to shareholder value.
For the past four proxy seasons, the Center, a non-partisan, non-profit advocacy group, has been leading a shareholder campaign that includes 23 institutional investors and allied groups to get companies to agree to political disclosure and accountability. For the 2006 proxy season, shareholder votes on CPA-model resolutions averaged more than 21 percent. The resolution received more than 20 percent of the vote at 15 companies, and over 30 percent at five companies.