The shareholder pushback against Citizens United

PfizerA movement by shareholder groups across the country to force transparency about political activity upon their companies is gaining some traction as annual meeting time approaches.

Those efforts aren’t necessarily new. According to CitizensVox,  shareholders have filed more than 500 resolutions calling for more transparency in corporate political activity since the U.S. Supreme Court’s 2010 decision in Citizens United, holding that corporations had the right to spend unlimited amounts of money calling for the election or defeat of candidates.

What are new are the bills being introduced in state legislatures across the country, including House Bill 636 filed here, requiring corporations to make disclosure and in some cases get shareholder consent before spending company dollars on political contributions or expenditures.

Companies and trade groups gave more than $48 million to races for state-level candidates in 2014, and more than $211 million to state-level ballot measure campaigns, according to the Center for Public Integrity.

Here’s Maryland state Sen. Jamie Raskin, who’s also a professor of law at American University, explaining the underlying concept:

Even if citizens cannot keep executives from spending corporate money in elections, surely shareholders can stop it. After all, it’s their money, right?

Indeed, it is.

In fact, Supreme Court Justice Anthony M. Kennedy’s majority opinion in Citizens United essentially invites a shareholder solution. The premise of the decision was that government cannot block corporate political spending because a corporation is simply an association of citizens with free-speech rights, “an association that has taken on the corporate form,” as Kennedy put it. But if that is true, it follows that corporate managers should not spend citizen-shareholders’ money on political campaigns without their consent.

Kennedy wrote that, if shareholders oppose political expenditures made by management, they will be able to correct the situation “through the procedures of corporate democracy.” This will be easy to do, he predicted, because all political spending will be thoroughly disclosed online: “With the advent of the Internet, prompt disclosure of expenditures can provide shareholders and citizens with the information needed to hold corporations and elected officials accountable for their positions and supporters.”

A number of corporations face shareholder proposals at meetings this spring, including two of interest in North Carolina: Duke Energy and Bank of America.

Duke Energy shareholders have refiled a request made last year that the company disclose the details of its corporate political spending, including amounts and recipients.  As noted in the company’s shareholder meeting notice, that proposal garnered approval from close to half of Duke Energy shareholders last year.

Here’s the Duke Energy shareholder proposal:

Duke shareholders

In Bank of America’s case, shareholders are asking for better disclosure of lobbying expenses. Below is their proposal:

BOA shareholders

Not surprisingly, the board of directors for each company oppose the proposals.

 

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