We need a national rethink of the old labor management divide: President-elect Donald Trump won 43% of voting union households.
To get some perspective on this issue, I called up former SEC Commissioner Paul S. Atkins, appointed by President George W. Bush in 2002, and a senior advisor to President-elect Donald Trump, who is no stranger to the complex world of labor and anti-business activist influence.
Atkins shared the following thoughts on the ways politics, labor unions, and anti-business activist organizations can coerce business while appearing pro shareholder (this interview also appeared in Directorship Magazine).
Political donation disclosure on the surface sounds like a good thing.
In the wake of the Citizens United decision, shareholder activists, including unions, state pension funds and “socially responsible investors,” have increasingly turned to shareholder proposals to burden American businesses exercising First Amendment rights. While disclosure of these non-material expenditures might seem harmless, activists have not been shy about their true intention, which is to inhibit free speech.
For example, George Soros funded Media Matters, which bills itself as a “progressive research and information center,” says its goal is “to make the case that political spending is not within the fiduciary interest of publicly traded corporations and therefore should be limited.”
(Editor’s note: Media Matters website does not disclose donors, advisors, officers or its work on behalf of labor unions — referring to them as ‘activists’.)
Its tactic is to aggressively attack public companies for supporting policies with which it disagrees by providing information to “progressive partners” such as the AFL-CIO, SEIU, AFSCME and MoveOn.org, which then use that information out of context to tarnish companies’ reputations.
For instance, assume that a particular company contributes to a pro-business organization promoting corporate tax reform and that organization backs a candidate for elected office. Media Matters’ action network will portray that company’s financial support of the organization as an endorsement of the candidate and everything he or she has said or done — which is not the case.
Far from protecting the company, the disclosure of its political activities will subject it to increased harassment from those with an opposing view.
Who are the targets of these “progressive partners”?
Media Matters’ network is aiming at any pro-business associations and the companies that support them.
Have individuals been targeted?
Susan Bayh, an independent director who sits on the board of WellPoint, was targeted with a just-vote-no campaign. It didn’t work — she got more than 90 percent of the vote — but it was meant as a message to individual directors that could be hazardous not only to your company but also to your personal reputation.
Is activist spin working?
When faced with pressure from activists, even large companies such as Coca-Cola and McDonald’s back down.
One example is the pro-business American Legislative Exchange Council (ALEC), which was targeted by activists because of its work with state legislatures on regulatory and tax reform.
In the wake of the fatal shooting of Trayvon Martin, activists seized on ALEC’s work regarding voter identification to create negative publicity for contributors, especially big retail companies who supported the organization.
Companies are always going to be susceptible to this pressure because they’re afraid of boycotts.
What should smart companies and their boards be doing?
As with anything, the best approach for corporate directors and management teams is clarity of purpose and tying activities to building (including protecting) shareholder value.
Companies should reach out to their shareholders to explain why they need to be engaged in advocacy, including trade associations. It is a dangerous world — if you are not vigilant about protecting your interests, you may get eaten before you know it.
Disclosure proponents are promoting their agenda under the banner of “more information is always better.” Do you buy that logic?
Although the talking points of democracy — transparency, openness and disclosure — would seem to play well among shareholders, even the activists agree that disclosure isn’t really their goal.
For example, Mike Dean, the director of Minnesota Common Cause, has stated, “We want to make the case that political spending is not good for business. You’re going to offend your customer base no matter who you give to.”
Similarly, Mayor of New York Bill de Blasio, formerly of the Campaign for Accountability in Political Spending, has suggested that disclosure is just the stick to be used to browbeat companies. He said, “What happened to Target [which was attacked for contributing to a pro-business advocacy group] was child’s play compared to the strength that all of these organizations can bring to bear against companies that decide we’re going to go against.”