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Election Fallout Gets CPA’s ‘Collision Course’ Report National Attention
Top blue chip U.S. companies are awakening to the heightened risks of political spending in a hyperpolarized environment, as the Washington Post and other major media highlight recent warnings by CPA that now are coming true.
With Walmart, Google, Facebook and MLB among those suddenly demanding refunds of questionable midterm election donations to politicians, a Washington Post article spotlighted CPA’s “Collision Course” report as an authoritative study on the issue. The Post also interviewed CPA President Bruce Freed.
“Companies really have to pay much closer attention to where they’re giving and what they’re being associated with,” Freed told the newspaper. “Political spending is like a ticking time bomb. A contribution, even several years ago, can come back and haunt a company.”
CNN REPORT: Similarly CNN had an article saying politics has become “a risky business for companies” and noting CPA’s assertion that "Consumers and employees are much more sensitive to what they see the company associated with through their political spending.”
Public relations firestorms erupted in recent weeks for companies over their PAC donations to three politicians in midterm contests: Sen. Cindy Hyde-Smith, a Mississippi Republican; Rep. Steve King, R-Iowa; and Rep. Jason Lewis, R-Minnesota.
Hyde-Smith said if she were invited to a “public hanging,” she’d “be on the front row.” She defeated her challenger, former Rep. Mike Espy, a Democrat who is African-American, in a November runoff. King, who embraced a white supremacist, won reelection. Lewis had “a history of making racist and misogynistic remarks during a previous career as a radio host,” The Post reported; he was not reelected.
ASKING REFUNDS: Asking for refunds of PAC donations to Hyde-Smith’s campaign were Walmart, Google, Facebook, AT&T, Union Pacific, Boston Scientific, Pfizer, Leidos, Amgen, Aetna, Ernst & Young and Major League Baseball. A spokesperson for Walmart, the nation’s largest retailer, said it was the first time the company had asked for a political donation refund.
Earlier Intel, Purina, AT&T and Land O’Lakes had moved to end their financial support for Rep. King. More recently, MLB said it was suspending its program of political contributions, and planning tougher vetting, after the $1,000 donation to Lewis’s campaign drew scrutiny.
OTHER MEDIA: A Harvard Business Review article, titled “When CEOs Should Speak Up on Polarizing Issues,” emphasized the importance of companies aligning their rhetoric with their political spending dollars. The article mentioned CPA’s efforts and linked to its “Collision Course” report.
A Financial Times article about spending in the midterm elections used an interview with a scholar to highlight “Collision Course” themes. And ValueEdge Advisors featured on its web site excerpts of the report and praise for it.
Mutual Fund Support Spikes for Corporate Political Disclosure
Mutual fund support for CPA’s model resolution in the 2018 proxy season jumped eight percentage points from last year. This is the largest increase since the Center began tracking institutional investor votes a decade ago.
According to Fund votes, whic h conducted the research for CPA, the largest funds backed the political disclosure resolution 53 percent of the time, up from 45 percent in 2017. Of the 46 largest asset managers, 12 voted for all of the Center’s resolutions and 11 for none. Twenty-five of the 46 groups boosted their support from 2017 to 2018, while nine saw a decline in support.
“If there is one disappointment,” said CPA’s Freed, “it is that some of the largest institutional investors, Vanguard, Fidelity and BlackRock in particular, continue to refuse to recognize the importance of – and cast their proxies for – corporate political disclosure and accountability. Fortunately, that is not the case with other leading mutual funds.”
Five groups – BNY Mellon, Janus Henderson, Eaton Vance, PIMCO and Lazard – increased their support by over 40 percentage points. However, AMG and State Street support dropped for CPA’s resolutions.
The full report is available on CPA’s website.
Del. Chief Justice Strine Calls Out Big 4 Institutional Investors on Corporate Political Disclosure Proxy Votes
In a speech this week at New York University School of Law, Chief Justice Leo E. Strine Jr. of the Delaware Supreme Court said corporate political spending and dark money are rising in America, and he encouraged the largest institutional investment managers to take action.
“At the very least, the Big 4 cannot credibly continue to vote against proposals to make public corporations disclose their political expenditures, when there is overwhelming evidence that no one, including the FEC, can credibly track the corporate money flowing into our political process,” Strine said. His speech drew on mutual fund family voting data from the Center for Political Accountability.
Strine went further to conclude that “the clearest way for the Big 4 to correct their fiduciary blind spot would be for them to support proposals to bar corporate political spending without super-majority stockholder support.”
The Big 4 include BlackRock, Fidelity, Vanguard and State Street.
CPA In the News
Politico, examining Amazon’s decision to up its presence in Northern Virginia and New York City, turned to CPA for analysis of the interplay between the corporation’s political needs and the influence of lawmakers representing the two regions.
Index Makes Inroads
The NABPAC slide mentioning CPA was part of a presentation titled, “ Challenging the Narrative and Opening Minds: PACs and the 116th Congress.”
Fourth Corporate Political Accountability Roundtable: Feb. 28-Mar. 1
Leaders in academia, business and the law will participate in the Fourth Corporate Political Accountability Roundtable on February 28 and March 1 at New York University’s Stern School of Business. The program will be framed around the Center for Political Accountability’s ‘Collision Course’ report.
Released earlier this year, the report was the first to examine the heightened risks for companies in today’s hyper-polarized environment from political spending that contradicts their core values and positions.
Participants invited include Harvard Law Prof. Lucian Bebchuk; Yale political science Prof. Jacob Hacker; former White House counsel Robert Bauer; Margaret Foran, Senior Vice President and Corporate Secretary at Prudential Financial; Amy Borrus, Deputy Director of the Council of Institutional Investors; and Securities and Exchange Commissioner Robert Jackson.
The Roundtable’s co-sponsors are the Stern School, The Wharton School at the University of Pennsylvania, Baruch College’s Zicklin School of Business and CPA.
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