Shareholders — including institutional investors — are succeeding this year in pushing to get more information from companies on their political contributions and lobbying costs.
As of mid-June, 85 shareholder proposals were filed seeking disclosure on political or lobbying spending, according to ISS Analytics, the data arm of Institutional Shareholder Services, Rockville, Md. Of those 85 proposals, 13 have been challenged by companies, with the Securities and Exchange Commission granting two no-action letters related to procedural grounds. In one case, the proponent failed to meet requirements for ownership of stock; the other case was deemed duplicative because the issue already had been proposed.
The combined political proposals have been the most common proposal sought by shareholders in 2018, according to ISS. And 23 of the 85 proposals year-to-date garnered more than 30% of shareholder support, in line with the past three years. But no proposal has received majority support this year.
Since the financial crisis, the peak year for political issues was 2012, when 116 shareholder proposals were made. Twenty-five were challenged by companies that resulted in 14 no-action letters.
Over the years, more S&P 500 companies have voluntarily disclosed at least some information related to political spending without a proxy vote, according to the Center for Political Accountability. In 2017, the most recent year for available information, the CPA noted that 295 companies disclosed at least some election-related spending, about the same as 2016.
"Political disclosure and accountability is now seen as the norm," said Bruce Freed, president and founder of CPA. "It's something that companies are expected to do."
After a shareholder proposal is introduced, proponents have the option to withdraw it if they come to an agreement with the company. So far in 2018, 12 proposals on this issue have been withdrawn. That compares with 20 in 2017 and 23 in 2016.
When a proposal is withdrawn, it typically signifies the company's willingness to engage with shareholders to resolve issues, explained John Roe, managing director and head of analytics at ISS. "Generally, it's a pretty good sign when we see withdrawals happen," he said. "It means there was productive engagement."