June 20, 2012
Summary & Analysis of Results of 2012 Lobbying Disclosure Resolutions
Shareholder votes for lobbying disclosure resolutions indicated strong support in the second year since first being introduced in 2011. Shareholders filed resolutions at 38 corporations asking them to report on federal and state lobbying expenditures, including indirect funding of lobbying through trade associations, and 20 of these proposals went to a shareholder vote. These proposals averaged 24 percent support, showing substantial investor interest in greater corporate lobbying disclosure. In 2011, five lobbying disclosure resolutions came to vote and averaged 24 percent.
In the wake of Citizens United, a record number 127 shareholder proposals focused on political spending and lobbying were filed for 2012, making it a major theme of the proxy season.
Lobbying disclosure proponents believe that enhanced disclosure will enable them to better evaluate business risk associated with a company’s efforts to influence regulatory and legislative processes. Most companies currently have a “lobbying disclosure deficit.” A November 2011 study by Si2 described gaps and need for improved lobbying disclosure by S&P 500 companies, finding that 64 percent of companies make no mention of lobbying activities, policies or oversight and only 13 companies in the S&P 500 provided investors information on how much they spend on lobbying.
Along with lobbying expenditures at the federal and state level and indirect lobbying through trade associations, the proposal also seeks disclosure of membership in and payments to any tax exempt organization that writes and endorses model legislation, which includes the American Legislative Exchange Council (ALEC).
The resolutions led to investor dialogues at many companies, and these discussions resulted in 13 agreements to withdraw the proposal, with companies agreeing to various enhanced disclosures, including federal and state lobbying payments, lobbying priorities, board oversight, trade association memberships, indirect funding of lobbying through trade association payments and to review membership in ALEC.
Companies receiving the proposal that have since resigned from ALEC are Coca-Cola, Johnson and Johnson, Kraft Foods, PepsiCo, and Yum! Brands.
The highest 2012 vote total was 45 percent support at Chesapeake Energy, where the company had lobbied to weaken shareholder rights. In 2008 and 2009, shareholder proposals calling for annual election of directors had received majority support from shareholders. Instead of listening to shareholders and declassifying its board, in 2010 Chesapeake instead participated in drafting a new Oklahoma law to require classified boards. At the 2012 annual meeting, Chesapeake shareholders delivered high votes of disapproval against management on a wide range of issues from pay to governance reforms.
Timothy Smith, Director of Environmental, Social and Governance (ESG) Shareowner Engagement at Walden Asset Management and one of the coordinators of this initiative commented, “Investors seek to understand how company dollars are spent to influence our laws and regulations by lobbying. This year investors raised the bar by asking 38 companies to disclose their direct and indirect lobbying activities. Whether the issue is financial reform environmental responsibility or shareholder rights, it is important for investors to understand how company dollars are spent to influence our laws and regulations by their lobbying actions.”
“Oversight of lobbying and trade association payments is a board responsibility. Shareholders have a right to know how boards are pursuing this duty,” Smith noted. “The number of agreements between investors and companies was also a very positive outcome as many companies and boards realized there was a gap in their disclosure of lobbying expenditures and board oversight.”
More than 40 investors joined in filing and co-filing the resolution seeking comprehensive disclosure of corporate lobbying. This unique investor network was organized by AFSCME and Walden Asset Management, a division of Boston Trust & Investment Management Company.
For further information contact:
Timothy Smith, Walden Asset Management, (617) 726-7155, [email protected].
Proposal Results
Chesapeake Energy (CHK) 44.7%
3M (MMM) 39.3%
Abbott Laboratories (ABT) 36.6%
Union Pacific (UNP) 35.5%
Devon Energy (DVN) 31.3%
Bank of America (BAC) 31.1%
UnitedHealth Group (UNH) 29.9%
Verizon (VZ) 28.5%
Peabody Energy (BTU) 27.9%
ConocoPhillips (COP) 25.1%
Amgen (AMGN) 24.9%
Chevron (CVX) 23.3%
Altria Group (MO) 20.5%
GEO Group (GEO) 18.3%
United Parcel Service (UPS) 16.9%
Southern (SO) 11.3%
IBM (IBM) 9.8%
Goldman Sachs (GS) 8.4%
Kraft Foods (KFT) 8.2%
PepsiCo (PEP) 7.1%
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Filers of Lobbying Disclosure Resolutions
Pension Funds
New York State Common Retirement Fund
Labor
AFSCME Employees Pension Plan
AFL-CIO
Communications Workers of America
Service Employees International Union
Asset Management Companies
First Affirmative Financial Network
Green Century Funds
PAX World Funds
Sustainability Group, Loring Wolcott & Coolidge
Walden Asset Management
Zevin Asset Management
Foundations
Brainerd Foundation
Edward W. Hazen Foundation
Haymarket Foundation
Lemmon Foundation
Nathan Cummings Foundation
Needmor Fund
Russell Family Foundation
The Funding Exchange
Tides Foundation
Non-Profit Institutional Investors
Manhattan Country School
Religious Filers
Catholic Health East
CHRISTUS Health
Congregation of Benedictine Sisters, San Antonio, TX
Dubuque Franciscans
First Parish Unitarian Church, Cambridge, MA
Franciscan Sisters
Glenmary Home Missioners
Jewish Voice for Peace
JOLT Coalition (Justice Organizers, Leadership & Treasurers)
Mercy Investment Services
Mount St. Scholastica
Northwest Women Religious Investment Trust
Province of St. Joseph of the Capuchin Order
Sisters of Charity, New Jersey
Sisters of Charity of the Incarnate Word, San Antonio, TX
Sisters of the Holy Names of Jesus & Mary U.S. Ontario Province
Sisters of Notre Dame de Namur, Boston
Sisters of Notre Dame, Toledo
Sisters of St. Dominic of Tacoma
Sisters of St. Francis, Philadelphia
Sisters of St. Joseph of Boston
Unitarian Universalist Association
Individuals
Daniel Altschuler
Gwendolen Noyes
Gun Denhart