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Following Aftermath of Insurrection, Van Hollen, Menendez Demand Greater Accountability and Transparency in Corporate Political Spending

Today, U.S. Senators Chris Van Hollen (D-Md.) and Bob Menendez (D-N.J.), members of the Senate Committee on Banking, Housing, and Urban Affairs, reintroduced the Shareholder Protection Act of 2021 to ensure public companies are more transparent and disclose their political spending activities to their shareholders.

Following the events of January 6th, 2021, corporate America’s response to the violent insurrection at the U.S. Capitol demonstrated precisely why corporate political spending is material information to shareholders, who deserve full visibility into the causes supported by the companies in which they choose to invest. Some public companies’ decision to suspend or reevaluate further political donations is an acknowledgment that political donations can significantly affect a company’s reputation and financial health. Without public disclosure of political contributions, shareholders are left in the dark about decisions that may affect a company’s bottom-line, and in the case of the January 6th insurrection, decisions to support organizations and campaigns that may have advocated stopping the certification of a free and fair election.

“The torrent of dark money that has flooded our political system since the disastrous Citizens United ruling is a grave threat to our democracy. We need public disclosure so the American people have transparency instead of allowing these corporate special interests to go unchecked. Shareholders and the public have a clear and material interest in corporations’ political spending to influence them and decisionmakers – it’s past time to mandate these disclosures,” said Senator Van Hollen. 

In addition to helping introduce today’s bill, Senator Van Hollen recently reintroduced the DISCLOSE Act, which would require organizations spending money in federal elections to disclose their donors; and the EMPOWER Act and the Restoring Integrity to America’s Elections Act, which would revitalize public funding for presidential campaigns and strengthen the Federal Elections Commission (FEC) respectively. 

“Few companies today actually disclose their political spending to investors, let alone give them a say in this process,” said Senator Menendez. “The events of January 6 taught us just how important this information is to investors and the public at large. Now is the time to reexamine how corporate executives spend shareholder money to influence election results and support causes with wide-ranging impacts to our country, including the health of our democracy. Corporations should not be allowed to use shareholder dollars as their piggy banks to support in secret whatever causes they may prefer. It’s long past time this information be made public and for shareholders to have a say.”

The Supreme Court’s 2010 Citizens United v. FEC decision opened the floodgates for corporate executives to spend unlimited money from company treasuries to disproportionately influence election outcomes, undermining the health of American democracy. While the Supreme Court has ruled that companies should be treated as people for purposes of free speech in electoral campaigns, the rights of the actual people investing in these large corporations – shareholders – have been largely overlooked. To date, more than 1.2 million securities experts, institutional and individual investors, and members of the public have pressed the U.S. Securities and Exchange Commission (SEC) for a political spending disclosure rule. Yet, no political spending disclosure standards have actually been established, which has allowed corporate executives to continue spending shareholder money without disclosure to and approval from the very investors funding those contributions.

This bill has been cosponsored by Senators Jeff Merkley (D-Ore.), Cory Booker (D-N.J.), Richard Blumenthal (D-Conn.), Mazie Hirono (D-Hawaii), Patrick Leahy (D-Vt.), Elizabeth Warren (D-Mass.), Dick Durbin (D-Ill.), Kirsten Gillibrand (D-N.Y.), Amy Klobuchar (D-Minn.), Ed Markey (D-Mass.), Jeanne Shaheen (D-N.H.), Tammy Baldwin (D-Wis.), Sheldon Whitehouse (D-R.I.), and Dianne Feinstein (D-Calif.). The bill is also supported by Public Citizen, a consumer rights advocacy group and think tank. 

The Shareholder Protection Act:

  • Requires shareholders to authorize, on an annual basis, a political activities budget requested by a company. The budget must receive a majority of votes representing all outstanding shares. Fiduciaries voting on behalf of their investors must disclose their vote to investors.
  • Covers political spending activities affected by the Citizens United decision, including electioneering communications and independent expenditures. Dues and payments made to trade associations and other tax-exempt organizations are included if they could be used for such spending.
  • Requires a company’s board of directors to vote to authorize each expenditure over $50,000 within the overall budget approved by shareholders.
  • Requires public companies to disclose (online, to shareholders, and the SEC) individual board member votes and the details of each such approved expenditure.
  • Requires the GAO to periodically report to Congress on implementation and compliance.