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May 16, 2006
Amgen Recommends Support for Political Donations Resolution, Bolstering Broader Campaign
by Bill Baue
The Center for Political Accountability, which coordinates the political contributions campaign,
released a report on trade association contributions that previews its 2007 proxy season strategy.
SocialFunds.com --
The shareowner resolution campaign coordinated by the Center for Political Accountability (CPA) requesting transparency and
board oversight of corporate political contributions has experienced significant developments this
past week. First, in an incredibly rare move, Amgen (ticker: AMGN) recommended voting "for" a
political contributions resolution filed by Green Century Capital Management. At the company's annual
meeting last week, 75.5 percent of voting shareowners supported resolution (Amgen's count of 67
percent support included abstentions, while SEC guidelines call for counting only "for" and
"against" votes).
 "Amgen's move sets a very important precedent
that a corporate board appreciates the importance of political disclosure and accountability," said
Bruce Freed, co-director of CPA. "This is the first time that a board has taken this action."
"Up to now, agreements for disclosure and board oversight have been reached through
dialogues with management," Mr. Freed told SocialFunds.com. "The action adds to the momentum
building for companies to disclose and seriously examine their direct and indirect political
spending."
Average support for the resolution thus far this year is 29.85 percent, up from
11.15 percent in 2005 and 10.61 percent in 2004, the campaign's inaugural year. Seven companies
have adopted transparency and board oversight of political contributions this proxy season,
including Bristol-Myers Squibb (BMY), Coca-Cola (KO), Eli Lilly (LLY), McDonald's (MCD), PepsiCo (PEP), Southern (SO), and Staples
(SPLS). Three companies--Morgan Stanley (MS), Johnson &
Johnson (JNJ),
and Schering-Plough (SGP)--adopted the measures last year.
In the second major development, CPA yesterday released a report that digs deeper into the
subterranean world of corporate political giving and maps out the next generation of shareowner
advocacy for next year.
"We'll be expanding our focus in the 2007 proxy season to
include not just company soft money contributions, but also payments to trade associations and
other tax-exempt organizations that are used for political purposes," said Mr. Freed. "We're
looking to get companies to disclose the full range of their political spending."
The
report, entitled Hidden Rivers, spotlights how company contributions to trade associations
can support causes that may be unaligned with companies' stated values. More disturbingly, these
contributions are hidden from shareowners and even companies' own boards.
"Hidden
Rivers is the first in-depth examination of how trade associations have become the Swiss bank
accounts of American politics and the threat this poses to shareholders, directors, and companies,"
the report states. "In 2004, more than $100 million was spent by just six trade associations on
political and lobbying activities, including contributions to political committees and candidates."
The trade associations include the US
Chamber of Commerce, the Business
Roundtable, the National Association of
Manufacturers, the American Tort Reform
Association, the Pharmaceutical Research &
Manufacturers of America, and Americans for Job Security. The report focuses on contributions
to these trade associations by 18 companies, including Johnson & Johnson (one of the few that has
implemented board oversight and transparency), 3M (MMM), DaimlerChrysler (DCX), Dow (DOW), Pfizer (PFE), and
Weyerhaeuser (WY).
The report
specifically examines judicial elections in seven states (Illinois, Ohio, West Virginia, Alabama,
Mississippi, Louisiana, and Texas ) supported by trade associations and related organizations to
expose judge's platforms that are out of sync with corporate policies. For example, companies with
Equal Employment Opportunity (EEO) statements prohibiting discrimination on the basis of sexual
orientation supported judicial candidates running campaigns that opposed gay rights indirectly via
trade association contributions.
"In another case, the report looks at direct and indirect
funds provided by several high-profile companies to a Mississippi Supreme Court race where the
candidate was alleged to have run a racist campaign," the report states. "The use of trade
associations as conduits for political spending allows companies to give political money and then
claim they didn’t know that it ended up supporting organizations and candidates with which they may
not want to be publicly associated."
The report ends with seven action steps. Among other
things, it calls on companies to disclose and explain payments to trade associations and other
tax-exempt groups used for political activity, require board oversight of these expenditures, and
demand that trade associations inform and consult members about the group's political activities
and spending. If trade associations refuse to comply, CPA urges companies to drop their
memberships.
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