Earlier this week, activist investors attempted to push through a shareholder resolution barring Chevron from using corporate funds for political activities. The resolution called for the board of directors to “adopt a policy to refrain from using corporate funds to influence any political election.” If passed, it would have prohibited not only direct contributions, but also electioneering communications, independent expenditures, and contributions to trade associations and non-profits where those funds are used to influence an election or referendum.
The resolution was a flop. Although the activist investor firm which filed the proposal claimed that the vote count represented “a turning of the tide,” in reality, only four percent of shareholders reportedly backed it.
Chevron’s board had unanimously recommended a vote against the proposal and shareholders overwhelmingly agreed. The board’s recommendation emphasized that “Chevron’s participation in the political process is an important means of protecting the interests of the Company and its stockholders.” The policy, it noted, would undermine both “the Board’s flexibility to exercise its business judgment in a manner that it reasonably believes is in Chevron’s best interests” and “Chevron’s voice and position within the energy industry.”
The resolution’s failure is another example of the lack of shareholder support for corporate political spending proposals. As we previously highlighted, “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).” The ubiquity of political spending resolutions therefore continues to evidence the zeal of the activists behind them, not necessarily widespread and genuine shareholder interest and support.