Group Cites Improvement in Political Spending Disclosure

By Cydney Posner

According to this article from the Washington Post, the largest public companies appear to be providing more details about their political contributions. The Center for Political Accountability (CPA) found that, of the corporations it tracks, 78% have shown improvement in their 2013 political spending disclosures compared with 2012. The CPA scored the top 200 companies in the S&P 500 for disclosure policies and practices, with more points going to companies that made public their payments to trade associations and tax-exempt organizations and companies that posted a detailed policy governing political expenditures. Sixteen companies shared the top five scores on the CPA-Zicklin Index, up from six last year.

This trend may be intended to deter litigation in the face of pressure from shareholders, including the possibility of legal action under state law. According to an analysis by ISS, the number of shareholder proposals demanding more transparency regarding political spending increased from 88 in 2011 to 126 in 2013. While there has been a "steady increase' in the percentage of shareholders who favor proposals for spending disclosure, nevertheless, the "vast majority of these proposals have been rejected, and most by large margins." According to one commentator, by "the time a proposal comes before shareholders, it's almost too late to craft an effective policy that can be in the interest of shareholders and the corporation. By that time, the conversation is pretty adversarial."

The CPA has long been promoting voluntary disclosure with moderate success, but its push for political spending disclosures was energized by the 2010 Supreme Court decision in Citizens United. However, companies vary significantly in the content of their voluntary disclosure, a problem that could be remedied by an SEC requirement. Disclosure proponents contend that, to assess whether political spending exposes companies to "reputational, business or legal risks," shareholders "need to know precisely how a company is spending money on politics."

Whether the SEC will step in to mandate reporting on political spending remains to be seen. According to the article, business groups and Republicans in Congress have "fiercely opposed" the concept. After a group of 10 law professors filed a rulemaking petition advocating a spending disclosure requirement and the petition generated substantial support from retail investors and others, the SEC said that it was planning a proposal. However, SEC Chair Mary Jo White has declined to take a public position on the matter. (See my articles of 5/7/13, 4/25/13, 2/26/13, 11/8/12, 6/7/12, 10/31/11, 7/20/11, 7/14/11 and 3/23/06.)

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