Citing a recent action by the Securities and Exchange Commission (SEC), John C. Bogle writes in a column for The New York Times, “Shareholders – not self-interested corporate managers – should, and can, decide policies on corporate political contributions.”
Earlier this year, the SEC issued a decision that shareholders of Home Depot would have the chance to vote on a measure regarding the corporation’s political expenditures. “This action provides shareholders with greater protections when corporations spend their money, in the form of general corporate funds, on politics,” the March 25 SEC letter states. The SEC action was prompted by Home Depot’s effort to keep shareholders from voting this June on the political expenditure resolution.
Bogle, founder of the Vanguard Group, writes:
What makes this strengthening of shareholder rights particularly important is that over the past 50 years control of corporate America has shifted from individual stockholders to institutional stockholders. But these institutional investors have been unwilling to challenge political activities by corporate boards, even when those activities are not in their shareholders’ interests.
Noting the high court’s opinion in Citizens United v. FEC, which found that corporations have First Amendment rights to freely funnel expenditures into political campaigns, Bogle maintains that institutional investors have “an obligation to act.”
For all its faults, the Citizens United ruling upheld the disclosure requirements of the campaign financing law, and I had hoped full disclosure might limit corporate contributions. But in fact, corporations are able to exploit provisions in the law governing nonprofit groups to make lavish political contributions without disclosure, making it easier than ever for cash to subvert our political system. Action to limit contributions at the corporate level is therefore urgent.