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.
Brennan Center for Justice at N.Y.U. School of Law
Center for Media and Democracy
Chesapeake Climate Action Network
Citizens for Responsibility and Ethics in Washington (CREW)
Coffee Party USA
Corporate Accountability International
Corporate Ethics International/Business Ethics Network
Free Speech for People
Friends of the Earth
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
Service Employees International Union (SEIU)
Social Equity Group, Ron Freund and Duncan Meaney
Strategic Counsel on Corporate Accountability, Sanford Lewis
U.S. Public Interest Research Group (US PIRG)
United Food and Commercial Workers
West Virginia Citizen Action
Wisconsin Democracy Campaign
Zevin Asset Management, LLC
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.
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 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.
Publicly Traded Companies Should Have to Reveal Political Activity, Groups Say at Action
WASHINGTON, D.C. – The Securities and Exchange Commission (SEC) should require publicly traded companies to disclose their political activity, People For the American Way, the Coalition for Accountability in Political Spending (CAPS), Public Citizen, Common Cause, U.S. Public Interest Research Group (USPIRG) and other groups said at a rally today held outside the SEC building. The action highlighted the need for disclosure of corporate spending in elections in the wake of the U.S. Supreme Court’s decision in Citizens United v. Federal Election Commission, which allows corporations to spend unlimited amounts from their treasuries to influence elections.
As participants in the Corporate Reform Coalition, the groups also pressured the commission to act through an avalanche of public comments submitted to the commission. Currently, more than 75,383 people have submitted comments to the agency. The Supreme Court endorsed full disclosure by an 8-1 majority in the Citizens United ruling and one SEC Commissioner, Luis Aguilar, has voiced his support.
“As we work toward a constitutional amendment to undo the harmful effects of Citizens United, a rule requiring publicly-traded corporations to disclose their political spending would be a powerful step toward curbing the undue influence that well-heeled special interests hold in our elections,” said Marge Baker, Executive Vice President of People For the American Way. “A functioning democracy requires transparency – and today we urge the SEC to take action to uphold that fundamental value.”
To learn more about the Corporate Reform Coalition, visit: http://www.corporatereformcoalition.org.