With six big companies recently having decided to adopt disclosure policies for their corporate political contributions, shareholders for an even bigger one — General Motors — will put their own proposal up for a vote at GM’s Tuesday annual meeting.
Were the measure — offered by shareholder Catholic Healthcare West — somehow stunningly to overcome GM’s opposition, it would require GM to issue a political spending report to shareholders twice a year. The report would include the names of the company’s political contribution decision-makers and an explanation of the internal policies about donating. It would also require GM to provide an accounting of all company monetary and non-monetary funds used for direct or indirect political contributions and expenditures on behalf of political candidates, political parties, political committees, and other political entities.
A GM spokesperson declined to comment to CFO.com. However, its 2008 proxy statement shows the automaker opposing the measure, noting that its current political disclosure policy already goes beyond legal requirements for corporate political disclosure.
This year, for example, GM voluntarily disclosed for the first time that $55,000 in contributions were made in 2007 to tax-exempt organizations known as 527 groups (after the Internal Revenue Code section that applies to them), and to individual candidates for state and local office. GM plans to repeat such disclosures annually.
While campaign finance laws prohibit companies from donating directly to federal candidates, companies can still contribute to 527s and trade associations that use donations to support political campaigns. These groups are not regulated by the Federal Elections Commission and therefore are not required to disclose their contributors’ list.
Activist shareholders, such as the one filing the GM proposal, are pushing companies to take disclosure step further and disclose membership fees paid to political entities such as trade associations that allow companies to engage in indirect spending.
Bruce Freed, director of the Center for Political Accountability, a nonprofit group that has led a campaign to push corporate disclosure of political spending, and has consulted with Catholic Healthcare West on the GM proposal, told CFO.com that disclosing trade-association membership is the next step companies should take for responsible accountability and transparency in disclosing political spending.
A company’s involvement with trade associations present a risk of conflict when a trade associations values and the company’s values don’t align, he said. “Disclosure of trade-association membership is critical and board oversight is important so management knows that the board will be asking how the company’s money is being used, what the beneficiaries of the trade association are spending it on.”
Freed noted that each of the 18 companies that has adopted political disclosure policies in 2008 will disclose so-called soft money donations, donations to state and local candidates, and tax exempt organizations and trade-association membership dues. These companies also agreed to require board oversight of political spending.
The latest companies to approve such a measure are Prudential Financial, UnitedHealth Group, Procter & Gamble, Avon Products, Devon Energy, and eBay. A total of 51 companies — more than a third of the Standard & Poor’s 100 — have already signed on. And Freed says he expects the number to continue growing. The center is currently working with 60 companies, a third of which are expected to announce policies in 2008. Last year, 22 companies signed on, compared with 7 in 2006 and 3 in 2005.