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Proxy Resolutions Aim to Stifle Corporate Speech
Proxy Resolutions Aim to Stifle Corporate Speech
Sep 21, 2024 11:36 AM

On Friday, June 6, shareholders of Wal-Mart Stores, Inc., will gather at the Bud Walton Auditorium on the University of Arkansas campus in Fayetteville, Ark. Among them will be As You Sow member Zevin Asset Management, which is pushing a resolution demanding the retailer issue annual reports on its policy, lobbying and membership expenditures. All of this, of course, is intended to embarrass Walmart in the same-ol’ name-and-shame game employed so often by shareholder activists advancing a progressive agenda.

What apparently bothers Zevin is Walmart’s exercise of its voice in policy issues directly impacting pany, its shareholders and – most important – its customers. Zevin’s resolution goes even further by requiring Walmart divulge its contributions to such tax-exempt groups as the American Legislative Exchange Council, the U.S. Chamber of Commerce or the Business Roundtable. Why? Well – to Zevin and other shareholders cut from the same sackcloth — it’s unseemly that the world’s pany engages with a group that writes model legislation. Never mind that pany employs more than 2 million people worldwide and donates more than $1 billion each year to charities, it’s the incorrectly perceived unsavory political nature of anything that drifts right-of-center.

From the As You Sow website:

This resolution from Zevin Asset Management asks for annual reports on policy, payments, memberships in groups that write model legislation, information on how these payments occur, and how management and the board of directors monitor them. The proposal says the reports should include:

1. Company policy and procedures governing lobbying, both direct and indirect, and grassroots munications.

2. Payments by Walmart used for (a) direct or indirect lobbying or (b) grassroots munications, in each case including the amount of the payment and the recipient.

3. Walmart’s membership in and payments to any tax-exempt organization that writes and endorses model legislation.

4. Description of management’s and the Board’s decision making process and oversight for making payments described in section 2 and 3 above.

For purposes of this proposal, a “grassroots munication” is munication directed to the general public that (a) refers to specific legislation or regulation, (b) reflects a view on the legislation or regulation and (c) encourages the recipient of munication to take action with respect to the legislation or regulation. “Indirect lobbying” is lobbying engaged in by a trade association or other organization of which Walmart is a member.

Both “direct and indirect lobbying” and “grassroots munications” include efforts at the local, state and federal levels.

The report shall be presented to the Audit Committee or other relevant mittees and posted on Walmart’s website.

Sigh. It’s all so Rockwell, but substantially more difficult to dance to. The ridiculous lengths taken by Zevin’s resolution not-so-coincidentally resemble more than 40 resolutions submitted by members of As You Sow and the Interfaith Center on Corporate Responsibility. Both groups are linked with Walden Asset Management and Trillium who, are, in turn, affiliated with the Center for Political Accountability. Led by Bruce Freed, CPA is partially funded by George Soros’ Open Society Foundations.

As noted by the Wall Street Journal editorial board on Friday, May 23:

Mr. Freed works with political investor groups like Walden Asset Management and Trillium that own shares but whose real purpose is to put proposals on the proxy ballot. The proposals are backed by the AFL-CIO and SEIU, which want to shut down petition from business groups. Also providing public harassment muscle is the left-wing Democracy Alliance, which connects high-dollar liberal donors with progressive groups like CREW, Public Citizen, Common Cause and Media Matters for America.

The WSJ continues:

In a 2011 memo, Media Matters wrote that its strategy was to launch “shareholder resolution campaigns to prevent corporations from making these types of [political] expenditures.” The disclosures, it continued, would then “create a multitude of public relations challenges for corporations that make the decision to meddle in political campaigns”; and “allied organizations” will “provoke backlashes panies’ shareholders, employees, customers, and the public at large.”

Fortunately, thus far, Mr. Freed’s efforts – and those of his clergy and religious co-conspirators – haven’t yielded terrific results. WSJ reports Freed’s claim his arm-twisting convinced panies to divulge spending on lobbying, political campaigns and donations to business-oriented tax-exempt organizations. However, the WSJ notes:

Of the 94 shareholder proposals on corporate political spending or lobbying introduced this year, 52 have already been voted on, according to filings at the Securities and Exchange Commission. A mere 22.2% of shareholders supported political disclosure, virtually unchanged from last year. Some 25 are rewarmed proposals that saw their support weaken, and more than 75% got fewer votes than in 2013.

Whew! But the cost of fending off such resolutions is immense in terms of freedom of speech as well as in dollars. The WSJ concludes:

Disclosure sounds like corporate apple pie, but there’s no fiduciary reason panies should have to disclose in a proxy how much they give to groups like the Chamber of Commerce, the Business Roundtable or to political campaigns. In this era of government economic dominance, political spending to prevent regulatory damage is as critical a business expense as marketing. Campaign-finance laws already require that candidates disclose their donors and the amounts they give, and most business trade groups reveal how much they receive panies.

It’s good to see that investors are figuring out that the real risk to business is from Mr. Freed’s campaign for disclosure, not from lobbying.

Not only Mr. Freed, but as well the nuns, clergy and other religious shareholders following his misguided efforts to suppress corporate speech.

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