The 2010 Supreme Court decision in Citizens United unleashed political spending by corporations and the 2012 elections are expected to be the most expensive ever.1 The Center for Political Accountability (CPA) and The Zicklin Center for Business Ethics Research recently issued their second annual Index of Corporate Political Accountability and Disclosure. The Index analyzes the manner in which S&P 200 companies are navigating corporate political spending after Citizens United based on the practices and policies of these companies as publicly disclosed on their websites. The Index sponsors believe that disclosure of corporate spending gives investors the facts needed to evaluate whether such spending is in the best interests of shareholders, identifies possible sources of risk and helps ensure meaningful and effective board oversight.

Highlights of the 2012 Index include:  

  • Many companies have increased their level of disclosure; of the 88 companies studied both in 2011 and 2012, 85% improved their overall scores for political accountability and disclosure, with the most improved, Costco, going from a score of 3 (out of 100) in 2011 to 85 in 2012;
  • Almost half (47%) of the companies studied reported their contributions to candidates, parties and “super-PACS,” 11% reported that they make no such contributions and 42% made no disclosures;
  • More than half (57%) provided a full political spending policy on their website, 32% gave brief policy statements and 11% made no such disclosures;
  • More than half (56%) reported that the board of directors regularly oversees political spending, 48% reported that a board committee regularly reviews company policy on political spending and 46% said that a board committee reviews company political expenditures;
  • Smaller companies were less likely to provide full disclosure of political spending and board oversight;
  • The highest scoring companies (based on a scale of 0 to 100) were Merck (97), Microsoft (94), AFLAC (93), Gilead (92) and Exelon and Time Warner (each tied with 88); and 
  • 18 companies were tied for last with a score of 0.

After all the data is in, we can expect that the amount of corporate political spending in 2012 will surpass all previous records and that there will be continued calls for disclosure.2 Accordingly, we expect that corporate governance “best practices” will soon require public companies to voluntarily disclose on their websites or through their SEC reports, information on their policies on political contributions and the amounts of such contributions. Companies not presently making such disclosures should consider “electing” to make them in the future.