Corporate Political Activity - Other Political Spending
NorthStar Asset Management has a new resolution expressing its longstanding concern about consistency between companies’ public policy positions and their PAC and corporate political spending. It is asking Home Depot and Intel to report on “a cost‐benefit analysis of the most recent election cycle’s political and electioneering contributions, examining the effectiveness, benefits, and risks to shareholder value associated with those contributions.” Last year it asked these companies about the congruency between their corporate values and political contributions and related risks, and called for advisory votes from shareholders, earning 5.6 percent at Home Depot and 7 percent at Intel.
This year, Home Depot is arguing at the SEC that the proposal duplicates the election spending resolution it received first from NYSCRF. The commission has yet to respond.
Charitable giving: Harrington Investments has resubmitted its proposal voted on last year at McDonald’s, targeting what it sees as a disconnect between the company’s charitable giving and its food menu. Investors last year gave it just 3.7 percent, after the SEC rejected the company’s argument that it concerned ordinary business because of its focus on the specific concern of childhood nutrition. It must earn at least 6 percent this year to qualify for resubmission. It asks for a report “listing and analyzing charitable contributions during the prior year,” which would:
- Identify organizational or individual recipients of donations, whether cash or in-kind, in excess of $500 and aggregate of smaller contributions by categories of recipients such as community organizations, schools, dietary organizations, medical groups, environmental, churches, etc.;
- Identify areas of alignment and potential conflict between the Company’s charitable contributions and the Company’s key stated ambitions, values and mission as stated in its corporate social responsibility reports and SEC filings;
- Include management’s analysis of any risks to the Company’s brand, reputation, or shareholder value posed by public controversies associated with contributions or any incongruencies with corporate values;
- Include coherent criteria for assessing congruency and brand risk, such as identifying philanthropic areas or initiatives considered most germane to corporate values and types of donations that may be contrary to company values or reputation; and
- Based on the above, evaluate and state justification for any identified incongruent activities.
Government service proposal challenged:
The AFL-CIO has returned with its “government service golden parachute” proposal. The resolution asks Citigroup to “adopt a policy prohibiting the vesting of equity-based awards for senior executives due to a voluntary resignation to enter government service.” It goes on to define this as equity-based awards including “stock options, restricted stock and other stock awards granted under an equity incentive plan,” and government service as employment by any U.S. federal, state or local government or any “supranational or international organization, any self-regulatory organization, or any agency or instrumentality of any such government or organization, or any electoral campaign for public office.”
The bank has challenged the proposal at the SEC, saying it concerns matters that are financially immaterial to the company that are not otherwise related to its business, using the same arguments noted above with respect to the lobbying resolution. The proposal earned 35.5 percent in 2017 and 30.5 percent in 2016. It suggests equity awards should be based on company performance, not prospective government service.