July 13, 2011
Shareholder Protection Act Would Give Company Owners a Voice in Corporate Campaign Spending and Require Increased Disclosure
Rep. Capuano and Sens. Menendez and Blumenthal Propose Improving Corporate Governance in Response to Citizens United Decision
WASHINGTON, D.C. – The Shareholder Protection Act, introduced today, is a necessary response to the U.S. Supreme Court decision last year that let corporations spend as much money as they want to influence elections, Public Citizen said today.
The Shareholder Protection Act, introduced by Rep. Michael Capuano (D-Mass.) and Sens. Robert Menendez (D-N.J.) and Richard Blumenthal (D-Conn.), would prohibit corporate campaign spending without the knowledge and consent of a company’s shareholders. The measure is designed to mitigate the Supreme Court’s ruling in Citizens United v. Federal Election Commission.
“Corporations cannot vote, but they have access to massive accumulated wealth, which now can be targeted like a laser to influence the election of candidates,” said Lisa Gilbert, deputy director of Public Citizen’s Congress Watch division. “Decisions to use this wealth for political influence are made by CEOs, often without the knowledge or consent of their shareholders.”
For nearly a century, America prohibited direct campaign contributions and spending of corporate funds in federal elections. As a result, the problems posed by a CEO dipping into the corporate treasury without telling shareholders or investors and freely spending that money to promote or attack candidates have never been the subject of responsible corporate governance – until now. But in January 2010, the Supreme Court opened the floodgate of unlimited corporate spending in elections without providing shareholders and investors any safeguards over how their money is spent. Shareholders, investors and the public today rarely are told when a CEO is spending company funds on candidate elections.
The Shareholder Protection Act would require CEOs to receive annual shareholder approval of an overall political expenditure budget and mandate board ratification of specific campaign expenditures in excess of $50,000. Shareholders and investors would be notified of these campaign spending decisions, which also would be posted on the Internet for the public to see.
“The Shareholder Protection Act is a reasoned response to help offset some of the damage caused by the Citizens United decision, and we applaud the lawmakers who introduced it,” said Craig Holman, government affairs lobbyist for Public Citizen. “Responsible corporate governance requires that shareholders and investors are aware of, and participate in, decisions to spend their money on candidates, ensuring that political spending decisions are made transparently and for sound business purposes.”
Public Citizen is a national, nonprofit consumer advocacy organization based in Washington, D.C.