The TakeAway: Goldman Pledges No Political Spending (Thumbs Up), Target Political Contribution Backfires (Thumbs Down)
It’s Friday, a perfect opportunity to survey events of the week and reflect on their significance going forward. Friday’s also a good day to experiment a bit, so we’ll frame these events as “HITS“ (positive developments) and “MISSES” (questionable actions).
HIT: SEC to consider proxy access 8/25
Yesterday, The Wall Street Journal reported that the SEC will consider proxy access at an open meeting scheduled for August 25th. The Commission seeks to have a rule in place before the 2011 proxy season begins. Controversy swirls around this issue because it grants shareholders power to nominate candidates for corporate boards director —much like being a Senator for a state, only there are more than two. Insiders suggest that the SEC rule will grant shareholders who have held 3 percent of a company’s stock for at least two years this authority. The Council of Institutional Investors, among other groups, has been recommending this for years, most recently on Tuesday. Ted Allen of RiskMetrics notes that it’s unclear whether or not proxy access would apply to small cap firms or investment companies. Hats off to former SEC Chairman William Donaldson, who first proposed proxy access in 2003 in the wake of Sarbanes-Oxley.
HIT: Goldman Pledges No Political Spending
On Monday, The New York Times reported that Goldman Sachs pledged not to use their money to buy political ads. Their decision, according to the Times’ Javier Hernandez, was in response to pressure on Wall Street, as well as efforts of Bill de Blasio, New York City’s public advocate (or ombudsman). While it doesn’t completely defang corporate political activity, in the wake of Citizens United it’s certainly a “Hit” with us. We hope more companies will take Goldman’s lead. (We also wish more municipalities had a public advocate.)
MISS: Target Political Contribution Backfires
On the flipside, Target became one of the first companies to act on the Supreme Court’s Citizens United ruling allowing unlimited corporate electoral contributions by spending $150,000 to back a far-right Republican in Minnesota’s Gubernatorial race. In the week-and-a-half since Target CEO Gregg Steinhafel first defended the donation (prompting calls for a boycott), Target’s stock price tumbled 3.5 percent, representing a $1.3 billion plunge in value. Setting aside the politics at question to consider just the business case for political donations, a negative risk/reward ratio in the thousands seems to argue against this investment to curry favor.
MISS: Google and Verizon in Talks to Monetize the Web
Yesterday, Edward Wyatt of The New York Times revealed that Google and Verizon were in talks to create higher-priced Internet fast lanes that would give preference to certain kinds of content. This means Web users will have to cough up more to gain access to their favorite Web portals. The issue of “net neutrality” – or open access – has been around for awhile, and favored by those who view the Internet as free and open space for everyone. The Google-Verizon deal poses a direct challenge to the Federal Communications Commission’s position on net neutrality, and would carve up the Internet into gated communities. Complicating the issue: Broadband is not considered a “regulated service” so does not technically fall under the FCC’s jurisdiction. Companies can do as they wish. Media reform groups such as Public Knowledge and Free Press have opposed this, calling it the end of the Internet as we know it.
We invite you to weigh in, supporting or refuting our choices – and adding other HITS and MISSES from the week.