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Shareholder Rights and Corporate Speech

April 28, 2013
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With the proxy season well underway, corporate governance issues are once again on the front burner. This year’s hot topic has been whether companies should be required to disclose their corporate political spending. RacetotheBottom bloggers anticipated that this year, as many as 120 shareholder proposals on corporate political spending disclosure might be offered. This number would represent one-third of all shareholder resolutions in 2013. Their post notes that this issue and other social impact issues are receiving greater — and broader  — shareholder support.  In the Harvard Law School Forum on Corporate Governance and Financial Regulation law professors Lucian Bebchuk and Robert J. Jackson, Jr. continued the ongoing debate on political spending disclosure, responding to those who disagree with their suggestion that the SEC develop rules to require such disclosure.

One of the most active shareholders seeking the disclosure of political spending is the New York State Common Retirement Fund which, according to the Lansing Star, has reached agreement with 18 companies in which it invests regarding the disclosure of political spending. The fund has been so aggressive it sued Qualcomm Inc. to gain access to that company’s books and records. See New York State Comptroller Press Release. Six weeks later, Qualcomm announced it settled the fund’s lawsuit, implementing a revised political spending disclosure policy in which Qualcomm will post online the company’s contributions to political candidates and political parties, political expenditures to trade associations and Section 501(c)(4) organizations, and contributions to influence ballot measures.

And according to the New York Times blog Politics, the SEC may soon enter the fray, possibly proposing a political spending disclosure rule within the next week. In response, Representative Ann Wagner introduced H.R. 1626, the “Focusing the SEC on Its Mission Act.” The bill would amend the Securities Exchange Act to prohibit the Commission from requiring any issuer to disclose its political expenditures, including the disclosure of dues or payments to any trade association that can be transferred to lobbying groups.

Navigating the intersection of shareholder rights and corporate speech will involve many twists and turns.


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