From Zero to 32.73 at Bank of America

First, a correction. In my last post about the 2011 proxy season, I wrote that shareholder resolutions requiring disclosure of grassroots political spending brought by AFSCME to Prudential and Bank of America had met with zero support. That is incorrect.

ProxyMonitor reported the zero vote tally because the votes had not yet been cast. The two AFSCME proposals regarding grassroots lobbying were listed on ProxyMonitor with other, fully tallied 2011 results, including one AFSCME proposal to IBM that received nearly 30 percent support; and I wrongly assumed that that meant the Prudential and BofA proposals had already been voted on. Instead, ProxyMonitor included them simply to show – I guess — that they had been filed and were on the docket. At the time I wrote my last post, zero results had been reported, because the shareholder meetings hadn’t yet been held.

Serves me right for relying solely on the numbers in the “Votes” column on the database. Common sense would dictate that with AFSCME in the room a tally of zero would have been unlikely, unless (as I thought) some agreement to table the proposal had been reached before the meeting; and I should have checked the reported data against other news stories and the companies’ own sites. It’s a little odd that ProxyMonitor indicates a pending vote by reporting a tally of zero, and I’ve written to the Manhattan Institute asking about this point. But now I understand that the ProxyMonitor database is not strictly historical, and that should be taken into account when looking at emerging trends or patterns in 2011.

In any case, votes on those resolutions have now been cast, and the site has been updated with the results.

The proposal to Prudential won a modest 8.03 percent of the vote — no big surprise there.

The proposal to Bank of America – which held its shareholder meeting on Wednesday of last week, amid protests over its mortgage and foreclosure practices — was another matter altogether. 32.73 percent of BofA shareholders voted in favor of grassroots lobbying disclosures. That is well past the conservative 30 percent threshold set by Ernst & Young. BofA’s board of directors can’t put off this issue much longer.

This outcome is in keeping with the trend toward political disclosure I’ve discussed previously, with shareholders pressuring companies to report on where they spend their lobbying dollars, and lobbying now considered part of a company’s risk profile. The question is what Bank of America’s board will do about it: will they show leadership, or try to hide out for another year?

It’s unlikely they will do all that the proposal requires. AFSCME asked Bank of America to provide an annually updated report disclosing 1) policies around lobbying contributions and expenditures; 2) payments, “both direct and indirect, including payments to trade associations, used for direct lobbying and grassroots communications.” The kicker was a third request, requiring the bank 3) to identify — for each payment — the person who decided to make the lobbying expenditure and those who participated in the decision to make payments to grassroots lobbying campaigns. Now that sounds like accountability.

John Keenan, the champion of the proposal and a strategic analyst for AFSCME, seems braced for a long tough slog. “We have concerns over our company’s sincerity when it comes to commitment to transparency and accountability,” he said in his remarks at the shareholders’ meeting [Keenan’s remarks start at around 1:29 in this webcast]. Keenan noted that “last year, BofA agreed to disclose its political contributions on its website, including accounting for political contributions made by the Bank’s PACs,” but the reporting was so “anemic” that the “company and the board should be embarrassed by this weak effort.” The bank pointed interested parties to a federal database and left them to figure it out for themselves.

And though Keenan and others were able to determine that BofA “spent about 7.4 million in 2009 and in 2010 on Federal lobbying activities,” he noted “incomplete disclosure at the state level as state lobbying disclosure is not comprehensively required by law.” Keenan and his colleagues were able only to paint a “partial picture,” which showed BofA spending “more than 2.3 million” in 17 states. As for the rest? Even Bank of America itself may not have the whole picture.

It gets murkier. As I noted in a previous post, the area where it is most difficult to document these expenditures is in contributions to industry trade associations. Keenan cited an April 23, 2011 article in the LA Times documenting “a parallel, opaque system of political giving” in which the leading, politically active trade associations – the U.S. Chamber of Commerce chief among them – “took in more than $1.3 billion, more than the state of Vermont collected in taxes. These groups, in turn, spent some $500 million on lobbying and other political activity such as television advertising.”

How deep this goes is anybody’s guess. The LA Times report found that “substantial corporate political spending remains in the dark, leading to an incomplete, and at times misleading, picture of companies’ efforts to influence legislation and elections.” Keenan began to make the same point at the BofA shareholders’ meeting, but a testy and “impatient” CEO Brian Moynihan interrupted him repeatedly, told Keenan that his time was up, and then, finally, just cut him off.

In the wake of Citizens United, Keenan and others like him are trying to do what Congress has so far failed to do. We probably should not expect the appointed guardians of our republic to step up anytime soon. The news in mid-April that President Obama had drafted an executive order requiring disclosure of political spending — including contributions to third parties — from companies contracting with the federal government met with immediate denunciations from Republicans, who complained about Orwellian oversight and muttered things about the First Amendment. They did not offer a better proposal. Nor did the Democrats. In fact, just last week, The Hill reported, a growing number of Democrats repeated the Republican criticisms of the President’s executive order, and urged the administration to drop the plan, for fear that it might “politicize” the Federal contracting process.

To keep politics out of business, they oppose any measure to keep business out of politics.

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