As many of you know, I am a strong advocate for campaign finance reform and have pushed measures over the years that would return our election system to the voters and guarantee transparency. That’s why I was not pleased with the Supreme Court’s decision in Citizens United v. FEC last year, when they essentially declared that a corporation is a “person” and thus has the right to spend unlimited amounts of money on elections through independent expenditures. This decision opened the door to over $1.3 billion in corporate spending on the 2010 elections, much of which was funneled through groups that don’t disclose their donors.
The SEC has just issued what’s called a “no action letter” in a dispute between Home Depot and its shareholders. In it, the SEC told Home Depot that the corporation has to allow an advisory (non-binding) shareholder vote on corporate political expenditures. Home Depot must also publish its policies on political spending in its annual proxy statement, and include a report of the past year’s spending and next year’s anticipated amount. I’m very encouraged by the SEC’s action here because it is very similar to a bill I introduced last Congress in response to Citizens United: H.R. 4790, the Shareholder Protection Act. My bill requires an annual binding vote by shareholders to authorize a corporation’s proposed political spending, and it also mandates reporting of the past year’s expenditures. The Shareholder Protection Act was passed by the Financial Services Committee last year but never came to the full House for a vote.
Shareholders deserve a say in how their money is spent. The SEC took a very big step in the right direction with this action in the Home Depot case.
See the SEC ruling here: http://www.sec.gov/divisions/c…
If corporations are going to be considered people and granted Constitutional rights, lawmakers need to define who exactly has the right to exercise those rights. Seems to me that the CEO and the Board of Directors are just agents of the corporation. They have no more right to speak for the corporation than an attorney has to speak for a client–if the client vetoes a statement the attorney wants to put out or a deal the attorney wants to make, the attorney doesn’t get to consider the client’s decision “advisory”. So why should a CEO be able to treat shareholders’ decisions as advisory.
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p>Groups that want to mount another legal challenge to corporate political spending may want to take a look at this. I’m not so sure the CEO does have the authority to engage in political spending without a binding shareholder vote. Even then, the legality would still be questionable unless it’s unanimous. There are certain types of votes the majority shareholders can’t legally make because it would deprive the minority of their Constitutionally-protected property rights, such as voting to reallocate all profits to themselves and leave the minority with nothing. Corporate political spending may fall in this category where the minority shareholders’ property rights are violated by spending to support politicians they oppose, even if the majority approves.
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p>Any shareholder who objects to such spending is being forced to hand over a certain amount of property in the name of someone else’s speech. Arguing that this is legal is like claiming that your right to free speech entitles you to hold a campaign rally in my living room without my permission.
Right to vote (even non-binding) on expenditure?
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p>Report on expenditure made? And projected?
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p>I do not see a difference between the board of a corproation and the board of a labor union as far as these expenditures go.
that argument is disingenuous. The Supreme Court already has allowed labor union members to opt out of their union’s political spending, and reduce their dues accordingly. CWA v. Beck.