Shareholder Groups, Institutional Investors Launching Major Effort to Protect Interests of Investors in Wake of Citizens United Court Ruling

Shareholder Resolutions, SEC Rulemaking and Congress All Seen as Venues to Ensure Full Board Accountability in New Era of Unleashed Political Contributions

WASHINGTON, Feb. 4 /PRNewswire-USNewswire/ -- A large and growing group of shareholder organizations and major investors announced today that they are working  together to advance a wide-ranging, three-pronged response to the last month's U.S. Supreme Court decision providing much greater latitude to corporations making campaign contributions.  

The effort organized by the ShareOwners.org (http://www.ShareOwners.org) will focus on a combination of proxy resolutions by shareholder advocates, rulemaking by the Securities and Exchange Commission (SEC) and legislation by Congress.  (See more details below.)

Leading organizations involved in the shareholder push that has emerged since the January 21, 2010 Citizens United v. FEC ruling include:  ShareOwners.org, an investor-driven, Web-based organization; New York City Public Advocate Bill de Blasio, who is a trustee of the New York City Employees' Retirement System (NYCERS); the Center for Political Accountability, which has sponsored scores of related shareholder resolutions and one-on-one negotiations with companies; the Interfaith Center on Corporate Responsibility, a coalition of approximately 300 faith-based institutional investors representing over $100 billion in invested capital; Robert A.G. Monks, shareholder advocate, attorney and founder of Lens Governance Advisors; the Social Investment Forum, representing nearly 400 socially responsible investment professionals and organizations; Calvert, the mutual fund company; Pax World Management LLC; and Walden Asset Management, a division of Boston Trust Investment Management.  

Dozens of additional organizations, institutional investors, and other shareholders are expected to join the joint effort in the coming weeks.

Maureen Thompson, acting executive director, ShareOwners.org, said:  "Our focus is to ensure that the interests of investors are not steamrollered in the pursuit of unrestrained corporate politicking.   Research has shown that political spending by corporations often has a negative impact on stock value.  As a result, the recent Citizens United decision means that corporate boards must now be fully accountable for their political decisions and that shareowners know about them in advance.  To achieve that end, concerned shareowners large and small are now discussing a range of responses that will help ensure that corporate political spending does not erode shareholder value and the long term sustainability of the company."

Bruce Freed, president, Center for Political Accountability (CPA), said: "The Citizens United decision places companies under immense pressure to use shareholder funds to support candidates, groups and causes whose positions and activities could end up threatening a company's reputation, bottom line and shareholder value.  CPA and its partners already are vigorously engaging companies to adopt policies providing for disclosure and accountability of political spending.  We look forward to working with ShareOwners.org and other concerned parties in addressing this issue."

As a result of CPA's efforts, nearly half of the S&P 100 -- an index of the largest and most influential members of the corporate community -- has agreed to adopt the CPA's framework for political disclosure. Overall, 70 major companies have embraced this corporate governance standard.

Robert A.G. Monks, shareholder advocate, attorney and founder of Lens Governance Advisors, said:  "As they say, there is good news and there is bad news.  The bad news is that Citizens United represents the worst judicial decision since Dred Scott; the good news is that the Supreme Court of the United States has held that there is such a thing as corporate democracy.  Now is the time for shareholders to put that democracy to work to protect their own interests against boards that may want to 'play politics' and have no clue as to how to do so without devaluing their companies."

"Shareholders should demand that corporations put their interests ahead of political interests.  Investors can suffer when corporations can spend millions of dollars on elections with no disclosure and no limits. We need to rally shareholders nationwide to demand that the corporations they invest in are transparent and accountable for their campaign spending," said New York City Public Advocate Bill de Blasio.

Last year, the New York City Employees' Retirement System and New York City's four other public pension funds filed shareholder resolutions for full disclosure of political spending by several corporations in which they have substantial investments.  On January 27, 2010, Public Advocate de Blasio announced plans to work with the Council of Institutional Investors to build support for these resolutions in the national investor community.  The Council of Institutional Investors is a nonprofit association of public, union and corporate pension funds with combined assets that exceed $3 trillion.

ACTION PLAN

The three-pronged response currently being framed under the joint effort is:

* Direct engagement of management at publicly traded companies, modeled on the work done by Bruce Freed at the Center for Political Accountability and a number of institutional shareholders, as well as under the guidelines of the Council of Institutional Investors (CII).  That engagement through shareholder resolutions and one-on-one company "dialogues" typically involves (1) disclosure of a company's soft money contributions, payments to trade associations and other tax exempt organizations used for political purposes, and grassroots lobbying expenditures; (2) disclosure of a company's policies and procedures for political contributions and expenditures; (3) identification of persons participating in decision-making on the contributions and expenditures, and  (4) board oversight of the company's political contributions and expenditures.

* Outreach to the Securities and Exchange Commission (SEC), through both the Investor Advisory Committee and a direct petition requesting SEC rulemaking in this area. 

* A letter to Congress from the shareholder community asking lawmakers to ensure that shareholders have all tools they need to ensure that decisions about political spending by public companies does not erode shareholder value and the long-term sustainability of the company.    

ABOUT SHAREOWNERS.ORG

Launched in June 2009, ShareOwners.org (http://www.ShareOwners.org) is a nonprofit and nonpartisan organization that is educating and organizing U.S. investors to support both short- and long-term financial market reforms.  ShareOwners.org's broad four-part agenda focuses on the need for stronger regulation (including a beefed-up SEC), increased accountability of boards/CEOs, improved financial transparency, and the protection of the legal rights of investors.  With 500 members today and growing, Shareowners.org is working to substantially increase its ranks in 2010.

SOURCE ShareOwners.org, Washington, D.C.