Corporate political disclosure activists this week launched a new tactic in their fight to pressure companies to publicly disclose information about their political and lobbying activities.

For more than a decade, public pension funds and others have aggressively pushed shareholder resolutions that call on public companies to self-disclose information about contributions to trade associations and other non-profit groups that pay for election-related advertisements.  These efforts have been largely unsuccessful.  Since 2006, according to the Manhattan Institute’s ProxyMonitor, only one such proposal has received majority shareholder support, with average support over the last two years at just 23 percent.

These relatively low levels of shareholder support have come as other corporate political disclosure efforts have fizzled.  In 2015, Congress prohibited the Securities & Exchange Commission from using appropriated funds to promulgate a rule requiring public companies to disclose their political spending.  And just this week Congress voted to keep these restrictions in the latest appropriations bill.

Stymied in these efforts, the advocacy group Public Citizen yesterday published a report arguing that major mutual fund companies like The Vanguard Group, BlackRock Inc., and Fidelity Investments could change this trend if they used their shares to vote for corporate political disclosure shareholder resolutions.  According to the report, “64 percent of political spending disclosure shareholder resolutions at companies where mutual funds own more than 5 percent of common stock would have received majority support in 2016 if those mutual funds had voted their shares in support [of] the resolutions.”  The report comes in connection with a  grassroots advocacy campaign aimed at mutual funds and efforts by Senator Bob Menendez (D-NJ) to rally support for the cause.

It is unclear how successful these groups will be at convincing mutual funds to weigh in.  Mutual funds often defer to the experience and judgment of corporate boards and, to date, mutual funds have not supported these proposals.  They may be reluctant to reverse course now given the traditionally low levels of shareholder support, the fact that much of the requested information is already publicly disclosed, and criticisms that corporate political disclosure efforts can harm shareholder value.

Tags: disclosure, mutual funds, shareholder proposals
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Photo of Zachary G. Parks Zachary G. Parks

Zachary Parks advises corporations, trade associations, campaigns, and high-net worth individuals on their most important and challenging political law problems.

Chambers USA describes Zachary as “highly regarded by his clients in the political law arena,” noting that clients praised him as their “go-to outside…

Zachary Parks advises corporations, trade associations, campaigns, and high-net worth individuals on their most important and challenging political law problems.

Chambers USA describes Zachary as “highly regarded by his clients in the political law arena,” noting that clients praised him as their “go-to outside attorney for election law, campaign finance, pay-to-play and PAC issues.” Zachary is also a leading lawyer in the emerging corporate political disclosure field, regularly advising corporations on these issues.

Zachary’s expertise includes the Federal Election Campaign Act, the Lobbying Disclosure Act, the Ethics in Government Act, the Foreign Agents Registration Act, and the Securities and Exchange Commission’s pay-to-play rules. He has also helped clients comply with the election and political laws of all 50 states. Zachary also frequently leads political law due diligence for investment firms and corporations during mergers and acquisitions.

He routinely advises corporations and corporate executives on instituting political law compliance programs and conducts compliance training for senior corporate executives and lobbyists. He also has extensive experience conducting corporate internal investigations concerning campaign finance and lobbying law compliance and has defended his political law clients in investigations by the Federal Election Commission, the U.S. Department of Justice, Congressional committees, and in litigation.

Zachary is also the founder and chair of the J. Reuben Clark Law Society’s Political and Election Law Section.

Zachary also has extensive complex litigation experience, having litigated major environmental claims, class actions, and multi-district proceedings for financial institutions, corporations, and public entities.

From 2005 to 2006, Zachary was a law clerk for Judge Thomas B. Griffith on the United States Court of Appeals for the District of Columbia.

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