Today, in a packed conference room in the Capitol, Sens. Robert Menendez (D-N.J.) and Richard Blumenthal (D-Conn.) and Reps. Michael Capuano (D-Mass.) and Anna Eshoo (D-Calif.) joined Public Citizen’s Lisa Gilbert in announcing the introduction of the Shareholder Protection Act in both chambers of Congress. The legislation is designed to lessen the damage to our democracy caused by the disastrous Citizens United decision of the U.S. Supreme Court last year, which declared that corporations are to be treated as persons under the First Amendment and thus are allowed to make unlimited corporate expenditures promoting and attacking candidates.
For about a century, America prohibited direct campaign contributions and spending of corporate funds in federal elections. As a result, the issue of a CEO dipping into the corporate treasury without telling shareholders or investors and freely spending other people’s money to promote or attack candidates has 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 would also be posted on the Internet for the public to see.
The legislation is beginning with a bang. Even before the legislation was formally introduced in Congress, 43 House members and five senators have signed on as original co-sponsors of the bills.
In the House, the original co-sponsors include Reps. Capuano, Ackerman, Blumenauer, Butterfield, Cohen, Conyers, DeFazio, DeLauro, Edwards, Ellison, Eshoo, Filner, Grijalva, Heinrich, Hinchey, Hirono, Jackson Jr., Kaptur, Larson, Lee, Lynch, Maloney, McDermott, McGovern, Moore, Moran, Norton, Olver, Pallone, Pascrell, Pingree, Polis, Rangel, Rothman, Roybal-Allard, Sarbanes, Slaughter, Stark, Tonko, Waters, Welch, Woolsey and Yarmuth.
In the Senate, the Shareholder Protection Act is sponsored by Sens. Menendez, Blumenthal, Lautenberg, Whitehouse and Sherrod Brown.
So far, no Republican member of Congress has signed onto the legislation, despite the fact it is a straightforward corporate governance issue. The Shareholder Protection Act is not a restriction on campaign finance; it is not even an attempt to reverse the Citizens United decision. The Shareholder Protection Act simply requires that a CEO receive informed consent from shareholders when deciding to spend their money in candidate elections. Nevertheless, several Republicans have indicated they may consider supporting the legislation once it begins moving through Congress.
Today, the Shareholder Protection Act has begun to move through Congress.
The legislation is a reasoned response to help offset some of the damage caused by the Citizens United decision and it deserves bipartisan support. 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.
Craig Holman is Public Citizen’s government affairs lobbyist.