The Securities and Exchange Commission has ruled that a corporation preparing the proxy statement for its annual meeting cannot exclude proposals that the corporation
- include in the proxy statement a report on its policies on electioneering contributions, and on how those policies are implemented through past and planned expenditures.
- provide a mechanism for shareholders to offer in the proxy an advisory opinion on electioneering contributions.
The specific proposal ruled on by the SEC was brought by shareholders of Home Depot. The corporation had argued that
- the proposal was so inherently vague or indefinite that neither the shareholders voting on the proposal, nor the company in implementing the proposal, would be able to determine with any reasonable certainty exactly what actions or measures the proposal requires.
- the proposal sought to micromanage the company to such a degree that exclusion of the proposal would be appropriate.
- Home Depot’s policies and procedures compare favorably with the guidelines of the proposal such that Home Depot had substantially implemented the proposal.
The SEC stated that it was “unable to concur” with any of those views.
This important ruling came to my attention through the blog Corporate Disclosure Alert, which looks like a useful resource. Its posting on the SEC ruling against Home Depot begins,
Shareholders have won the right to seek an annual proxy review and vote on a company’s political spending, as a result of a new SEC decision. The SEC Staff, for the first time, allowed a shareholder resolution seeking shareholders’ say on political spending (in a decision known as a “no action letter”). The proposal will appear on the Spring 2011 proxy of the Home Depot. The decision opens new options for shareholders seeking to take action in the aftermath of Citizens United, portending diversified approaches to shareholder interventions beyond the predominant approach of seeking better disclosure.
The posting takes a fairly extreme position on political spending by corporations:
A corporation is not a mere group of individuals but a legally created moneymaking machine, and as such will warp our political process to the extent it is allowed to be a player.
Describing corporations as “moneymaking machines” overlooks the huge number of highly constructive nonprofit corporations such as the NAACP and the Sierra Club (and even Coffee Party USA, when it finally gets its act together).
Rather than restrict the extent that corporations are allowed to be players, let’s look for ways to empower players other than for-profit corporations.