Shareholder Protection Act

PFAW Releases New Toolkit on Getting Money Out and Voters In to Our Democracy

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PFAW

Shedding Some Light on Corporate Political Spending

Today People For the American Way joined with 38 ally organizations and individuals in sending a letter to Congress to ask for support of the Shareholder Protection Act.  The Act – sponsored by Rep. Michael Capuano (D-MA) and Sen. Robert Menendez (D-NJ) – would, among other measures, require that publicly traded corporations pre-approve their annual political expenditure budgets with shareholders and promptly disclose those expenditures to the public. 

The letter highlights the need for this type of legislation in the wake of the Supreme Court’s 2010 decision in Citizens United v. Federal Election Commission, which “brought a flood of new and secretive money into elections.” Since that decision, corporate officers have been able to spend unlimited amounts of corporate treasury funds to influence elections, often under the veil of ‘dark money’ groups that do not disclose their donors.   In essence, this means that millions of Americans who have invested in corporations are having their money used to engage in partisan politics – without their knowledge.

Unsurprisingly, this post-Citizens United landscape of secret spending  is not popular with the public. The letter notes:

A 2012 survey conducted by Bannon Communications for the Corporate Reform Coalition found that more than 8 in 10 Americans (81%) believe that the secret flow of campaign spending is bad for democracy, and 87 percent agree that prompt disclosure of political spending would help voters, customers and shareholders hold companies accountable for political behavior.

PFAW continues to advocate against corporations being able to spend unlimited amounts of money to influence our elections.  Legislation requiring shareholder approval for, and public disclosure of, corporate election spending will help end some of the abuses made possible by Citizens United.

The full text of the joint letter is below.
 

April 25, 2013

U.S. House of Representatives
Washington, D.C.  20515

United States Senate
Washington, D.C.  20510

RE: Support the Shareholder Protection Act

Dear Member of Congress:

We write to you to encourage your support of the Shareholder Protection Act, sponsored by Rep. Michael Capuano (D-MA) and Sen. Robert Menendez (D-NJ).

Our organizations come from diverse backgrounds, with concerns ranging from constitutional rights to corporate governance to protecting our air and water. We have many different priorities, but we all agree that the unprecedented 2010 Supreme Court decision, Citizens United v. Federal Election Commission, requires a strong response.

We are troubled for several reasons by the Supreme Court’s decision to give corporations the right under the First Amendment to spend unlimited funds from their corporate treasuries to support or attack candidates.

In the electoral arena, this decision has brought a flood of new and secretive money into elections, ratcheting up the cost of campaigns and increasing the time and resources needed for fundraising. Spending by outside groups funded largely by corporate interests and intended to influence the 2010 elections was more than four times as high than in 2006, the last mid-term cycle. Outside spending increased another four-fold again in the 2012 election cycle. The sources of much of this new money swamping our elections remains undisclosed, as corporations and other special interests launder their campaign funds through non-profit groups, such as the Chamber of Commerce, which are not required to disclose their donors. The ads funded by unaccountable corporate interests fueled massive attacks that compounded the negative tone of campaigns and added to the public cynicism of our elections.

In the legislative arena, the mere threat of unlimited corporate political spending gives corporate lobbyists a large new club to wield when lobbying lawmakers, and makes it harder for legislators to vote their conscience.

In corporate governance, unless a company sets its own internal policies otherwise, there are no rules or procedures established in the United States to ensure that shareholders – those who actually own the wealth of corporations – are informed of, or have the right to approve, decisions on spending their money on politics.

The Shareholder Protection Act provides a framework to rein in some of the damage in this troubling, new political landscape.

Specifically, the Act would:
  • Mandate prior approval by shareholders for an annual political expenditure budget chosen by the management for a publicly held corporation.
  • Require that each specific corporate political expenditure over a certain dollar threshold be approved by the Board of Directors and promptly disclosed to shareholders and the public.
  • Require that institutional investors inform all persons in their investment funds how they voted on corporate political expenditures.
  • Post on the Securities Exchange Commission web page how much each corporation is spending on elections and which candidates or issues they support or oppose.

American business leaders are concerned about the pressure on business to donate to political campaigns, and the influx of large, undisclosed donations to third party political organizations that are not required to disclose their sources of funding. In a Zogby International poll commissioned by the business-led Committee for Economic Development (CED), two-thirds of business leaders polled agreed with the statement: “the lack of transparency and oversight in corporate political activity encourages behavior that puts corporations at legal risk and endangers corporate reputations.”

In addition to business leaders, the general public at large believes in transparency and giving shareholders a voice. A 2012 survey conducted by Bannon Communications for the Corporate Reform Coalition found that more than 8 in 10 Americans (81%) believe that the secret flow of campaign spending is bad for democracy, and 87 percent agree that prompt disclosure of political spending would help voters, customers and shareholders hold companies accountable for political behavior.  Huge majorities of Americans across the political spectrum condemn corporate political spending and support strong reforms. For example, requiring corporations to get shareholder approval before spending money on politics is supported by 73 percent of both Republicans and Democrats, and 71 percent of Independents. About 84 percent of Americans agree that corporate political spending drowns out the voices of average Americans, and 83 percent believe that corporations and corporate CEOs have too much political power and influence.

Responsible corporate governance requires the involvement of informed shareholders and is not a partisan issue. We believe that holding management accountable and ensuring that political spending decisions are made transparently and in pursuit of sound business is important for both the market and for democracy.

We urge you to support the reasoned response that is the Shareholder Protection Act.

Sincerely,

Brennan Center for Justice at N.Y.U. School of Law
Center for Media and Democracy
Chesapeake Climate Action Network
Citizen Works
Citizens for Responsibility and Ethics in Washington (CREW)
Coffee Party USA
Common Cause
Corporate Accountability International
Corporate Ethics International/Business Ethics Network
Democrats.com
Demos
Free Speech for People
Friends of the Earth
Greenpeace
Harrington Investments, Inc.
Holy Cross International Justice Office
Illinois Campaign for Political Reform
Krull and Company, Peter W. Krull, President & Founder
League of Conservation Voters
Maryknoll Office for Global Concerns
National Consumers League
New Progressive Alliance
North Carolina Center for Voter Engagement
NorthStar Asset Management, Inc.
Ohio Citizen Action
People For the American Way
Progressive States Network
Public Campaign
Public Citizen
Service Employees International Union (SEIU)
Social Equity Group, Ron Freund and Duncan Meaney
Strategic Counsel on Corporate Accountability, Sanford Lewis
Sunlight Foundation
Torres-Spelliscy, Ciara
U.S. Public Interest Research Group (US PIRG)
United Food and Commercial Workers
West Virginia Citizen Action
Wisconsin Democracy Campaign
Zevin Asset Management, LLC

PFAW

Political Spending Resolutions Filed at 3 Corporations

Thanks to Citizens United, corporations have been spending unprecedented sums for political purposes. Short of a constitutional amendment to overturn that flawed decision, good government advocates are pressing a variety of strategies to minimize the undue influence corporations currently hold over our electoral system.

Requiring disclosure of corporate political expenditures is one powerful way to return some of the balance of influence to the American people. Activists are pressing for the passage of the DISCLOSE Act and the Shareholder Protection Act, and also submitted a record-setting action to the Securities and Exchange Commission calling for a rule requiring publicly-traded companies to disclose their political spending.

This week, the Corporate Reform Coalition is taking this call to the true owners of public corporations: the shareholders. This coalition of organizations, which includes People For the American Way, Public Citizen and others, is supporting first-time “political spending” resolutions and helping to organize rallies at the annual shareholder meetings of 3M and Bank of America, which are taking place this week, and also at Target Corporation, which will meet on June 14th.

The message is simple: Leave democracy to the people. Corporations should stop spending money on influencing our elections and focus on what they were created to do: make a profit for their shareholders. And if these corporations refuse to cease using their vast treasuries for political purposes, they at least should disclose their activities so that shareholders can make informed decisions.

These reforms speak to many Americans because so many people are shareholders. If you’ve ever bought a stock, had a 401(k) account or a pension, then you’re a shareholder – and it is your money might be spent on a candidate, cause or attack ad you don’t support, without your knowledge. We all have a right to know if our money is being spent to influence our democracy, and we should have the power to say no.

PFAW

Record-Breaking Effort to SEC: Disclose Corporate Spending on Elections

Until a constitutional amendment can overturn Citizens United, progressives around the country are working on various legislative workarounds to address the flood of corporate money being spent to influence our elections. While only a constitutional amendment can restore to the American people the authority to regulate such spending, there are several ways to compel companies to disclose their political spending to the public and bring much-needed accountability to corporations that use their vast treasuries to sway our elections.

The Securities and Exchange Commission (SEC) has the rulemaking authority to require corporations to disclose their political spending to their shareholders. This is significant because so many Americans are shareholders in one form or another: if you own a 401(k) or similar retirement account, you’re a type of shareholder; and the companies you invest with could be spending your money to support candidates or fund attack ads – all without your knowledge.

The American people have told the SEC to do its job. Yesterday, we broke the record for total number of comments submitted to the SEC on a particular rule: 178,000 Americans have written to the SEC, telling them to protect Americans from the undue influence of wealthy corporations and special interests. PFAW supporters contributed a sizeable chunk of about 24,000 signatures to the effort.

The Corporate Reform Coalition, a group of progressive organizations including PFAW, Common Cause, Public Citizens, U.S. Public Interest Research Group, the Coalition for Accountability in Political Spending and others has been pushing a consumer-driven campaign to ask corporations to refrain from engaging in political spending. We are also pursuing legislative solutions like the Shareholder Protection Act as well as other means to help shine light on the influence of corporate money in our democracy.

PFAW

PFAW Rallies for Corporate Political Spending Disclosure at SEC

PFAW joined a group of bipartisan organizations and public figures at a rally outside the Securities and Exchange Commission (SEC) in Washington today to demand that the agency use its authority to require publicly-traded corporations to disclose their political spending. Currently, corporations can use their treasuries to spend unlimited amounts to influence our elections – but that money belongs to the corporation’s investors. If you’re one of the millions of Americans with a 401 (k) or similar retirement account, it could be your money being spent for political purposes without your knowledge or approval.

That’s why disclosure is so important. Democracy depends on transparency, and until we can pass a constitutional amendment to undo the harmful effects of Citizens United and related cases that have helped to bring on the current crisis in our elections, a SEC rule requiring corporate disclosure is a powerful start. At the rally, themed “Wake up SEC,” pro-democracy groups made the case that the SEC needs to do its job and protect Americans from the undue influence of wealthy corporations and special interests. The American people are increasingly alarmed by the effects of money in politics, and we need a regulatory agency that is not asleep at the switch.

To make the point, over 75,000 people sent letters to the SEC in support of the proposed rule.

 

 

 

PFAW

Corporate Investment of Choice: Political Influence

It turns out that many major U.S. corporations do spend a great deal of money on government – but not on taxes. Rather, they pay lobbyists to garner favorable government. According to a recent report in the International Business Times, at least 30 multi-million dollar American corporations spent more money lobbying Congress than in federal income taxes between 2008 and 2010.

Corporate behemoths such as General Electric, Verizon Communications and Wells Fargo managed reap huge profits and actually receive tax rebates, while shelling out huge sums to influence politicians. The article was based on staggering findings by Public Campaign: The 30 corporations studied racked up $164 billion in profits and received $11 billion in tax rebates – a feat made possible with the help of $22 million spent on federal campaigns and much, much more on lobbying – over the two year period, all while laying off employees and increasing executive compensation at a time of stagnant middle class wages.

It’s hardly a surprise that corporations are investing so much in political influence, judging by the tax loopholes they’ve created and enjoyed. But it’s clear that these policies don’t serve the American people. Because corporations don’t have to disclose their political donations, shareholders are all too often put in the position of indirectly contributing to political campaigns they may not wish to support. Most shareholders would prefer their investments to go towards strengthening the company and the economy, but according to the report’s co-author, Matthew Gardner, corporations “are so busy avoiding taxes, it’s no wonder they’re not creating any new jobs.”

The time has come to demand accountability and fair treatment of corporations. This begins with stopping the undue influence they enjoy due to their ability to spend endlessly on lobbying, a luxury that everyday Americans simply do not have. Shareholders can demand that their investments go towards developing better products instead of to political contributions by supporting the Shareholder Protection Act. The harm caused by extensive corporate influence in the political system is clear, and we need to act now to restore the balance of power to the people.

 

PFAW

Corporate Political Spending: Relief through Consumer & Shareholder Pressure

Thanks to the Supreme Court’s decision in Citizens United v. FEC which granted corporations the same rights as people to spend unlimited, undisclosed money to influence elections, the 2012 election cycle promises to bring the biggest flood of political spending from outside groups we’ve ever seen. Such outsized influence by a few corporations and special interest groups is a staggering reflection on the state of our democracy, and it’s clear that corporations are well on their way to becoming our elected officials’ primary constituency. If this pattern continues unabated, American citizens will be left in the dust.

A recent story by the Washington Post examines two studies showing that although special interests are likely to continue flooding the electoral process with political donations, many are beginning to realize that avoiding political spending altogether is good for government and good for business.

Americans are taking back our democracy by showing corporations that staying out of the political process is in their best interest after all. Under pressure from customers and shareholders, corporations are realizing that when they engage in political spending, they become a symbol of what they support – and the public-relations impact isn’t always positive.

When Target gave money in July to a pro-business group in Minnesota, the company thought it was helping its bottom line by backing candidates in its home state who support lower taxes. Instead, the retailer has found itself in a fight with liberal and gay rights groups that has escalated into calls for a nationwide boycott and protests at the company's headquarters and stores.

The potential for a consumer backlash has caused corporations to reevaluate the benefit of interfering in the political process, and some are banning it outright. The threat of a shareholder backlash looms large as well, and shareholders are beginning to demand disclosure of where their investments ultimately end up. The Corporate Reform Coalition, along with PFAW, has been a strong supporter of the Shareholder Protection Act, which would require corporations to disclose their political donations to their shareholders, preventing a company’s investors from indirectly contributing to a candidate without their knowledge.

Citizens United may have opened the door to a corporate takeover of our democracy, but through public pressure, reform such as the Shareholder Protection Act and ultimately a constitutional amendment enabling the government to limit corporate influence in elections, we can ensure that the American people retain the loudest voice in our democracy.

PFAW

Press Conference to Support the Shareholder Protection Act

Tomorrow, PFAW will join the Corporate Reform Coalition to support the Shareholder Protection Act, a valuable tool which will help improve transparency in the wake of Citizen’s United by requiring corporations to disclose their political donations to their shareholders. Often, shareholders of a corporation may be indirectly contributing to a political candidate that they don’t personally support through the corporation's political contributions, and might not even be aware of it.


A press conference announcing the bill will be held on Wednesday, July 13 at noon in the Capitol. Sen. Robert Menendez and Rep. Michael Capuano, who are the sponsors of the House and Senate bills, and Sen. Richard Blumenthal are slated to speak.

PFAW

The Consequences of Citizens United

Ever since the Supreme Court issued its ruling in the Citizens United case in January, we’ve been warning that the decision would empower corporations to funnel unlimited donations through shadow advocacy groups to directly influence elections.

And guess what? It’s begun.

Just as we (and President Obama) predicted, corporations are already forming and funding political action groups with innocuous sounding names to anonymously support candidates they like and attack candidates they don’t.

For example, the coal industry already has a plan to create a shadow organization to directly advocate against “anti-coal” candidates, obscuring the sources of the organization’s money as they go:

The companies hope to create a politically active nonprofit under Section 527 of the Internal Revenue Code, so they won't have to publicly disclose their activities — such as advertising — until they file a tax return next year, long after the Nov. 2 election.

The U.S. Supreme Court ruled last winter that corporations and labor unions may pour unlimited funds into such efforts to influence elections.

"With the recent Supreme Court ruling, we are in a position to be able to take corporate positions that were not previously available in allowing our voices to be heard," wrote Roger Nicholson, senior vice president and general counsel at International Coal Group of Scott Depot, W.Va., in an undated letter he sent to other coal companies.

Citizens United didn’t just, as some supporters have claimed, allow corporate voices to be heard; it granted corporations unprecedented influence in democratic elections while permitting them to hide their involvement. It’s shadow organizations like this that make one wonder: why are Senate Republicans filibustering the DISCLOSE Act, which would help make corporate involvement in elections more transparent?

Meanwhile, the Minnesota gubernatorial race is providing another textbook example of the problems Citizens United is already causing for our democracy. Taking advantage of their new ability to pour limitless money into elections, several big corporations, including the retail giant Target, donated $100,000 each to a shadow group called Minnesota Forward, which has already produced an ad for Republican gubernatorial candidate Tom Emmer.

Public reaction to Target’s involvement in the race shows just why many politically involved corporations would prefer to remain anonymous:

Emmer is well known as a hardline conservative on social issues. For instance; he opposes gay marriage — a stance that angers some of Target's employees and customers. The company has been known for its gay-friendly employment policies.

Target CEO Gregg Steinhafel tried to address such concerns today with a letter to employees. He wrote, that "inclusiveness remains a core value of our company." That said, he added, "I consider it my responsibility to create conditions in which Target can thrive." And Minnesota Forward has pegged Emmer as the pro-growth candidate.

If the Senate had passed the DISCLOSE Act yesterday, Minnesota Forward would have to be a lot more forthcoming about the sources of its funding. As long as DISCLOSE is filibustered, the group has a lot more leeway for behind-the-scenes political activity. (And, until Congress passes a Shareholder Protection Act, even Target’s shareholders won’t be able to have a say in which political candidates their money is going to support). Voters and consumers have the right to know whether a corporation’s political money is where its mouth is.

Health insurance companies, too, are banding together to take advantage of the newly permissive electioneering rules:

Five of the nation’s largest health insurers are in serious discussions about creating a new nonprofit group and bankrolling it to the tune of about $20 million to influence tight congressional races and boost the image of their industry.

… “The objective is to make the House more accommodating to concerns that have been raised,” says one industry source. “They’re looking at toss-up candidates,” adding that the companies want to “focus resources to influence campaigns.”

Needless to say, like the coal companies, health insurance groups will not have to make their donations to such an advocacy organization public.

A stunning 85% of Americans agree that corporations already have too much influence on our elections; now we have proof that the Citizens United ruling is giving corporations even more power in our democracy. The proliferation of shadow groups doing the dirty work of big corporations makes the task of amending the Constitution to protect our elections from corporate money all the more urgent.

PFAW