3M Shareholders Protest Corporate Political Spending
Minneapolis-St. Paul-based 3M Corp. expects to face activists Tuesday, both inside and outside its annual shareholders meeting, because of its alleged secret spending on political campaigns.
A group of institutional investors, led by Trillium Asset Management Corp. of Boston, has introduced a shareholder proposal [PDF] asking that the corporation refrain from political spending, both directly and indirectly (i.e., funneling company money through third-party groups like so-called Super PACs).
While those in the meeting are voting, outside a coalition of advocacy groups including Minnesota Common Cause, Public Citizen, and Take Action Minnesota called for a rally and briefing about 3Ms political spending policies.
New York City public advocate Bill de Blasio, a trustee of the $40 billion New York City Employee Retirement System, said in a statement, Political intrigue is bad for the bottom line and a risk to the retirees that have millions invested in 3M stock. Its time for 3M's corporate board to wake up and do its job: secret political spending has to stop.
Shelley Alpern, vice president and director of shareholder advocacy for Trillium, explained in the statement that Target Corporation faced boycotts and protests in 2010 due to a contribution to a controversial groupMN Forward, which supported an anti-LGBT gubernatorial candidate. Then 3M put its brand and shareholder value at risk by making an additional donation to the same group, Alpern added.
Alpern accused 3M of undermining its own commitment to diversity by supporting MN Forward.
The shareholder proposal states that companies such as International Business Machines Corp., Colgate-Palmolive Company, Wells Fargo & Company, and others are increasingly adopting policies prohibiting spending of political funds directly or indirectly through third parties to influence elections.
Given the risks and potential negative impact on shareholder value, the proponents believe 3M should adopt a policy to refrain from using treasury funds in the political process, it says.
3Ms board of directors has asked stockholders to vote against the proposal to ban political spending.
Elected representatives at all levels of government make laws and regulations that can and do affect the companys business, 3M says in its proxy statement. To effectively advocate the companys and stockholders interests, we believe we must actively participate in the political process.
The company statement says 3M takes account of considerations that might put it at competitive disadvantage or might impair the companys reputation. But it adds, Our principal focus, however, is on advancing our business interests.
3M has a wide range of business interests, from health care products like stethoscopes to office products like Post-it Notes and Scotch tape.
The company also points out that its contributions strictly comply with the law. And it says it discloses all contributions in excess of $10,000 to third-party groups while detailing the companys political activities and issue advocacy on its corporate governance web page.
The 3M protest is part of a national movement to make companies more accountable and transparent, in the wake of the U.S. Supreme Courts January 2010 Citizens United decision. That ruling lifted a ban on the use of corporate funds for political purposes.
Also on the 3M ballot Tuesday is a shareholder proposal calling for more transparency around the companys lobbying activities, and for election of an independent chairman of the board. The company also opposes both those proposals.
As part of a movement dubbed the Shareholder Spring, the advocacy of Common Cause and its allies is one example of a wave of shareholder protests being aimed at some 100 companies in 2012.
See also: "Is Citi's Failed Say-On-Pay Vote a Sign of the Times?", CorpCounsel, April 2012.