Shareholders United: SEC Rules That Political-Spending Proposal Must Go to a Vote
By Nell Minow | April 6, 2011
Last week, the SEC ruled that companies must allow shareholder proposals that seek an annual review and vote on corporate political expenditures. NorthStar Asset Management filed a shareholder proposal at Home Depot (HD) asking the company to disclose its political spending policies and anticipated spending for the next year. Shareholders would also get to cast a non-binding vote on whether they supported these policies and spending plans.
NorthStar’s proposal isn’t binding, either — but Home Depot still challenged it at the SEC so it wouldn’t have to allow its shareholders to vote on it. The SEC staff ruled against the company and now shareholders of Home Depot will receive a proxy card or email notice giving them a chance to vote on NorthStar’s proposal at the company’s annual meeting on June 2. The SEC’s ruling opens the door to proposals along these lines at many more companies next year.
Sanford Lewis, who represented NorthStar in defending the proposal, writes,
With the SEC decision, the annual corporate meeting process can now become a battleground, not only on disclosure of spending, but also the financial risks to the company from that spending, the congruency of the spending with a company’s stated values, and with investors’ interests both as shareholders and as citizens.