May 20, 2014
Shareholders Gain Momentum in Quest for Transparency in Political Spending by Major Companies
Rally, Shareholder Vote and Concession by Google Chairman Eric Schmidt Last Week Highlight Increasing Calls for Political Spending Transparency
MOUNTAIN VIEW, Calif. – Shareholders are gaining momentum with demands for public companies to disclose their political spending, with the most recent advancement coming after a large rally last week outside the Google Inc. annual shareholder meeting at the Googleplex in Mountain View, followed by an acknowledgement by Google Executive Chairman Eric Schmidt that the company has heard the demands and will respond with ideas on how to address them. Votes representing more than 60 million Google shares were in favor of greater political spending disclosure.
Shareholder proposals seeking political spending disclosure were the most frequently filed environmental and social resolution during 2013, with 134 proposals averaging 32 percent support. From 2010 to 2013, the number of resolutions pertaining to political spending filed increased from 61 to 134. A shareholder proposal at Duke Energy also requested increased disclosure of the company’s political spending and received a 42 percent favorable vote from shareholders earlier this month. The proposal filed at Google by Walden Asset Management received the support of 34 percent of votes by shareholders who are not executive officers or directors.
Following a protest of more than 100 people at Google, activists with proxies attended the shareholder meeting and raised their concerns with Google’s executives. During the question and answer session, Sam Jewler, communications and research officer with Public Citizen’s U.S. Chamber Watch, asked why Google trumpets the value of opening up access to information around the world while hiding so much about its prodigious political spending.
“Shareholders investing in this company deserve to know how their money is being spent, whether those expenditures align with our values, or carry any risk, reputational or otherwise,” Jewler said.
He continued, “So I’m wondering, for one, how much money does Google provide to the Chamber of Commerce, and for what purposes? And, being that Google is one of the top corporate players in lobbying, and is also one of the less transparent in doing so, do you have any plan to be more transparent with shareholders and the public?”
In response, Eric Schmidt said, “Let me summarize your request, we need to be more transparent. And we’ve heard that from a number of other shareholders. Let us come back with some ideas.”
The shareholder proposal by Walden Asset Management asked for full disclosure of Google’s contributions to lobbying groups like the U.S. Chamber of Commerce and ALEC, as well as more information about how Google makes its political spending decisions and about its state-level lobbying. It received 60,472,787 votes, constituting an 8.6 percent favorable vote. But Google’s executive officers and directors control 525,781,283 of the votes to be cast. When these votes are excluded, 34 percent of shareholders supported the proposal. Despite writing, in part, “Google has long been a champion of disclosure and transparency,” Google’s board of directors wrote an official statement opposing the proposal. The 525 million executive officer and director votes may represent 82 percent of the total 642,699,641 votes against the proposal.
The CPA-Zicklin Index of the Center for Political Accountability rates Google’s political spending transparency at 51 percent – far behind successful tech peers such as Dell (77 percent), Intel (89 percent), and Microsoft (93 percent).
“The growing number of shareholder proposals calling for greater political spending disclosure reflects the concern Americans have with the increasing amount of money entering our political system in the wake of the terrible U.S. Supreme Court decisions in Citizens United and McCutcheon,” said Lisa Gilbert, director of Public Citizen’s Congress Watch division. “Companies that have nothing to hide will respond to their shareholders by disclosing more about their political activities. If they don’t, the Securities and Exchange Commission should respond to this swelling public sentiment by making an across-the-board rule calling on all public companies to disclose their political spending activities.”
The protest and disclosure vote at Google’s meeting come on the heels of a similar demonstration at Duke Energy. Hundreds of protesters gathered in the streets of Charlotte, N.C., during Duke’s shareholder meeting on May 1 to protest Duke’s close ties to the North Carolina state government and recent catastrophic environmental accidents, including the spillage of millions of gallons of toxic coal ash in the Dan River.
Shareholder proposals requesting more information about companies’ political and lobbying spending have been on the rise since the Citizens United ruling. Last year, 134 companies faced such proposals, and this year will likely see an even higher number of resolutions filed.