Post-Citizens United Victory at SEC

Shareholders United: SEC Rules That Political-Spending Proposal Must Go to a Vote
BNET
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.

Read full article at BNET

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Post-Citizens United Victory at SEC

Shareholders United: SEC Rules That Political-Spending Proposal Must Go to a Vote
BNET
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.

Read full article at BNET

Harvard Corporate Governance Blog

Don’t Ask, Don’t Tell: A Poor Framework for Risk Analysis by Both Investors and Directors

Harvard Law School Forum on Corporate Governance and Financial Regulation, on Sunday November 15, 2009

(Editor’s Note: This post comes to us from Sanford J. Lewis, Counsel to the Investor Environmental Health Network.)

A clash is emerging between the needs and duties of directors and investors to manage risks, and attorneys who advise “don’t ask; don’t tell” to minimize corporate liability in any possible future litigation. The task of mitigating this clash falls on the shoulders of regulators at the Securities and Exchange Commission and the Financial Accounting Standards Board.

When the Financial Accounting Standards Board (FASB) took up the issue of contingent liability disclosures on behalf of investors in 2008, it appeared progress would be made. However, under pressure from the corporate legal community, which sought to block any requirements to require disclosure of potentially prejudicial information, the FASB may now be about to take a step backward unless the directors and investors can be mobilized.  The Securities and Exchange Commission is also in a position to act to make vital improvements in disclosure of information relevant to potential liabilities.

Read more

Harvard Corporate Governance Blog

Don’t Ask, Don’t Tell: A Poor Framework for Risk Analysis by Both Investors and Directors

Harvard Law School Forum on Corporate Governance and Financial Regulation, on Sunday November 15, 2009

(Editor’s Note: This post comes to us from Sanford J. Lewis, Counsel to the Investor Environmental Health Network.)

A clash is emerging between the needs and duties of directors and investors to manage risks, and attorneys who advise “don’t ask; don’t tell” to minimize corporate liability in any possible future litigation. The task of mitigating this clash falls on the shoulders of regulators at the Securities and Exchange Commission and the Financial Accounting Standards Board.

When the Financial Accounting Standards Board (FASB) took up the issue of contingent liability disclosures on behalf of investors in 2008, it appeared progress would be made. However, under pressure from the corporate legal community, which sought to block any requirements to require disclosure of potentially prejudicial information, the FASB may now be about to take a step backward unless the directors and investors can be mobilized.  The Securities and Exchange Commission is also in a position to act to make vital improvements in disclosure of information relevant to potential liabilities.

Read more

SEC Restores Shareholder Rights

Interview with Sanford Lewis regarding SEC and risk resolutions at SocialFunds.Com

October 29, 2009
Activist Shareowners Celebrate SEC Reversal of Bush-Era Ruling
by Robert Kropp

SocialFunds.com — Shareowners seeking to engage meaningfully with companies on matters of environmental, social, and governance (ESG) criteria won an important victory this week, when the Division of Corporation Finance at the Securities and Exchange Commission (SEC) issued Staff Legal Bulletin No. 14E. The ruling effectively reversed an SEC decision enacted in 2005, under the Bush administration, which disallowed shareowner resolutions that addressed questions of financial risk associated with corporate activities on ESG issues.

The ruling arrives in time for the 2010 proxy season, as many shareowner proposals for the new proxy season will be filed in November.

SocialFunds.com spoke with Sanford Lewis, an attorney in private practice whose clients include the Investor Environmental Health Network (IEHN) and other responsible investor organizations working for shareowner rights. He said, “I think the Bush administration rule was politically motivated, and was never fully justified.”

 

Read More

SEC Restores Shareholder Rights

Interview with Sanford Lewis regarding SEC and risk resolutions at SocialFunds.Com

October 29, 2009
Activist Shareowners Celebrate SEC Reversal of Bush-Era Ruling

by Robert Kropp

SocialFunds.com — Shareowners seeking to engage meaningfully with companies on matters of environmental, social, and governance (ESG) criteria won an important victory this week, when the Division of Corporation Finance at the Securities and Exchange Commission (SEC) issued Staff Legal Bulletin No. 14E. The ruling effectively reversed an SEC decision enacted in 2005, under the Bush administration, which disallowed shareowner resolutions that addressed questions of financial risk associated with corporate activities on ESG issues.

The ruling arrives in time for the 2010 proxy season, as many shareowner proposals for the new proxy season will be filed in November.

SocialFunds.com spoke with Sanford Lewis, an attorney in private practice whose clients include the Investor Environmental Health Network (IEHN) and other responsible investor organizations working for shareowner rights. He said, “I think the Bush administration rule was politically motivated, and was never fully justified.”

Read more