Shareholders Flex Muscles on Political Spending, Executive Pay

by Jeremy Leaming

Shareholders are ratcheting up pressure on corporate executives to reveal the extent of political expenditures, and, in at least one case, pushing back against over-the-top compensation packages for executives.

Reporting for The Washington Post, Tom Hamburger notes that the massive health insurance company WellPoint is facing an “an increasingly aggressive campaign to force disclosure of corporate political and lobbying expenditures, including payments to the U.S. Chamber of Commerce ….”

A coalition of institutional investors, Hamburger says, is calling for the resignation of board members for “allegedly failing to oversee ‘high risk political spending.’” In particular, the shareholder coalition is troubled by $86 million that a trade association, which WellPoint is a member, transferred to the U.S. Chamber of Commerce during its fight against the Obama administration’s health care reform work.

The Post says that the coalition’s “effort to hold specific board members responsible represents a new militancy in the fight to require companies to reveal their political activities,” which has grown out of the aftermath of the high court’s 2010 opinion in Citizens United v. FEC, granting corporations unfettered ability to spend on political campaigns.

Director of GMI Ratings Nell Minow told the newspaper that demanding action against specific shareholders “may be the only way you make any progress” on forcing corporate transparency of political spending.

As The Post notes, political spending by corporations can be a risky endeavor. As noted on this blog, several public interest groups have demanded that corporations cut their ties to the right-wing group, ALEC, which has lobbied states to enact so-called “Stand Your Ground” laws, and onerous measures that hamper voters. ColorOfChange and the Center for Media and Democracy have successfully encouraged about a dozen corporations, such as Blue Cross Blue Shield and Coca-Cola to stop sponsoring ALEC.

MarketWatch also reports that a growing number of shareholders are “agitating for corporations to disclose what they spend on political advocacy ….”

Karl Sandstorm of the Center for Political Accountability said, “Many corporations are coming to realize that there are risks to political giving because of the amount of secret undisclosed money that appears to be finding its way into the 2012 election …. Shareholders want to know whether that spending keeps with their shareholder interests and all the public values of those companies.”

This week also saw a rare example of shareholders rebuking an excessive pay package for corporate leaders.

Citigroup shareholders, The New York Times reports, voted against a “$15 million pay package for the bank’s top executive, Vikram S. Pandit.” The Times says the vote marked “the first time that stock owners have united in opposition to outsized compensation at a financial giant” and comes against a backdrop of rising concern over the nation’s increasing income inequality.

Brian Wenzinger of Aronson Johnson Ortiz, which voted against the pay package, said “C.E.O.’s deserve good pay but there’s good pay and there’s obscene pay.”

[image via plurimus]