First-of-its-kind “Refrain From Political Spending” Resolution to Be Voted on at Bank of America Shareholder Meeting Wednesday
Media Contacts
Resolution would ask the corporation to opt out of the unlimited, often secret spending ability afforded to it by the Supreme Court in Citizens United
WISPIRG
On Wednesday, May 9, shareholders at Bank of America will vote “yay” or “nay” on a first-of-its-kind “refrain from political spending” resolution. Resolutions addressing political spending are among the most popular in the 2012 shareholder season, many dealing with the disclosure of such spending. This is the first shareholder season for this groundbreaking resolution which was introduced by socially responsible investment firms Trillium Asset Management at Bank of America and 3M Corporation and by Green Century Capital Management at Target Corporation.
The resolution would request that the board of directors refrain from using of corporate treasury funds to influence the political process. This would include contributions to Super PACs, political non-profits, such as the American Legislative Exchange Council (ALEC) of which Bank of America is a known member, and trade associations, such as the Chamber of Commerce. The resolution would not affect the lobbying expenditures, separate segregated fund (PAC) spending, or the ability of employees to participate in the political process.
In 2010, the Supreme Court ruled in Citizens United vs. the FEC that corporations have the right to contribute unlimited sums of money to influence an election, opening the floodgates for the type of corporate political spending which the “refrain” resolution seeks to address. Since that decision, outside spending in elections increased from 3.4 million in 2006 to 58.4 million in 2010 and from 25 million in 2008 to 121.1 million so far in 2012.
“This resolution strikes at the heart of the corporate and special interest erosion of our democracy. Bank of America is the archetype of the reckless corporation that we do not want having unlimited power in our democracy. Furthermore, with its reputation and stock price at historic lows, any mucking around in politics only creates more risks for the Bank’s shareholders. Corporate political spending is dangerous for shareholders and dangerous for democracy and if our courts and elected officials will not do it then we will rein in the corporations we own ourselves, starting at Bank of America,” said Blair Bowie, Democracy Advocate for WISPIRG, a good government group which in conjunction with the Corporate Reform Coalition, has been organizing citizens and shareholder groups in support of the resolution.
The Wisconsin legislature introduced a bill earlier this year that would require corporations based in the state to receive shareholder approval of political spending. That bill stalled in committee but is expected to be reintroduced during the next session.
Recent studies have shown that political spending can have a negative impact on a corporation’s bottom-line. An April 25 study from the University of Kansas and the University of Minnesota found a decline of 7.4 basis points in risk-adjusted stock return for every $10,000 in political donations and found a relationship between high political spending and poor corporate governance.
In addition, political contributions by Target Corporation and 3M became the subject of outrage and boycotts in 2010, leading to brand and reputation damage that many shareholder groups view as a threat to their investment.
WISPIRG is a state-based, membership-based public interest advocacy organization. www.wispirg.org.
The Corporate Reform Coalition represents a diverse set of reform groups, researchers, and investors working together to advance disclose and accountability of corporate political spending. Corporatereformcoalition.org.
