Political spending proposals were among the most common shareholder proposal topics in 2012, with more than 90 political spending proposals being submitted to S&P 500 companies (only 56 were voted upon). Despite the significant number of such proposals submitted in 2012, political spending proposals did not fare well with shareholders, garnering only 26% support from shareholders on average (as compared to 31% average support in 2011). To give this some context, political spending proposals fared extremely poorly when compared to an equally popular shareholder proposal topic in 2013—shareholder proposals seeking to declassify the board of directors. Like political spending proposals, shareholders submitted more than 90 board declassification proposals in 2012 (of which 52 were voted on), however, in a sharp contrast to political spending proposals, board declassification proposals received high levels of shareholder support—such proposals received average support of 84%.
While one shouldn’t read too much into these historical results, they do suggest that there is a disconnect between the level of interest in political spending by the shareholders who submit proposals on the topic and the interest of other shareholders when these proposals are put up for a vote. At a minimum, it means that companies that receive proposals on the topic need not panic—even if they are unable to get the proponents of political spending proposals to withdraw. Instead, consistent with the engagement activities that companies have already undertaken in connection with say on pay and other governance matters, companies that receive political spending proposals should engage with shareholders—educating them about their current political spending activities, highlighting the importance of involvement in legislative and regulatory processes for the benefit of shareholders, and where applicable, highlighting any disclosures they already make on their websites or otherwise regarding their political activities.