Last month, a Wall Street Journal editorial noted that proposals offered at shareholder meetings “intended to pressure companies not to spend money on politics are falling flat with investors.” It went on to state:
This non-change is nonetheless news because it comes despite a continuing political campaign to pressure CEOs and corporate boards. The leader of the movement is Bruce Freed, whose Center for Political Accountability is funded in part by George Soros's Open Society Foundations.
Mr. Freed works with political investor groups like Walden Asset Management and Trillium that own shares but whose real purpose is to put proposals on the proxy ballot. The proposals are backed by the AFL-CIO and SEIU, which want to shut down political competition from business groups. Also providing public harassment muscle is the left-wing Democracy Alliance, which connects high-dollar liberal donors with progressive groups like CREW, Public Citizen, Common Cause and Media Matters for America.
In a 2011 memo, Media Matters wrote that its strategy was to launch "shareholder resolution campaigns to prevent corporations from making these types of [political] expenditures." The disclosures, it continued, would then "create a multitude of public relations challenges for corporations that make the decision to meddle in political campaigns"; and "allied organizations" will "provoke backlashes among companies' shareholders, employees, customers, and the public at large."
One of Mr. Freed's gambits is to publicly float a proxy proposal, but then approach companies before an annual meeting and offer to withdraw it in exchange for concessions.
A new report from the Center for Competitive Politics explains the political campaign to silence businesses from taking part in public policy debates:
A cadre of unions, public pension funds, and activist investors are pursuing actions that would selectively burden American public companies from exercising their First Amendment rights to participate in public dialogue.
Having failed to achieve what they wanted through legislation, these activists turned their attention to executive agencies to try to silence opposition through regulatory fiat. These efforts included a draft executive order that would have required businesses to disclose political activities before bidding for federal government contracts, including support for trade associations and 501(c)(4) non-profit organizations, as well as separate regulatory efforts at the Federal Election Commission (FEC), the Federal Communications Commission (FCC) and the Securities and Exchange Commission (SEC).
In addition to these attempts to use the power of government to burden or silence the business community, activists and elected officials have engaged in an effort to force corporations, through public pressure, litigation, and corporate governance mechanisms, to disclose or scale back their expenditures related to lobbying and public policy activities. Much of this pressure has come from labor unions and other activists claiming to represent the interests of a company’s shareholders, but in actuality pursuing an ideological agenda unrelated to the profit-‐maximizing interest of most shareholders.
The report explains how foundations like George Soros’ Open Society Foundation fund groups like the CPA to build a false narrative that a company that engages in policy debates is “risky” for investors. By “co-opting various reputable organizations” like the University of Pennsylvania’s Wharton Business School, CPA coordinates an effort to perpetuate “the myth that increased disclosure has mainstream support from the business community.”
Activist groups like ThinkProgress and Media Matters then latch onto this false narrative to pressure public companies through letter-writing campaigns, shareholder resolutions, and lawsuits to disclose their public policy advocacy spending. While they claim it’s to promote “transparency,” the real intention is to “distort the disclosed information to ‘name and shame’ the company” like what Target experienced in 2010.
The end goal, as a Media Matters’ (also funded by Soros’ Open Society Foundation) 2013 strategic plan explains, is “to make the case that political spending is not within the fiduciary interest of publically traded corporations and therefore should be limited.” In other words: They want the business community to shut up, disarming one side in public policy debates.
Recently, former Mayor Michael Bloomberg told Harvard University graduates, "The more we embrace a free exchange of ideas, and the more we accept that political diversity is healthy, the stronger our society will be.” Unfortunately, a great number of activists would rather businesses be silent and have an organized campaign to ensure that happens.
Follow Sean Hackbarth on Twitter at @seanhackbarth and the U.S. Chamber at @uschamber.