Corporate Governance of Political Expenditures: 2011 Benchmark Report on S&P 500 Companies

Abstract

Corporate accountability and disclosure of expenditures appears to be increasing, with the boards of 31 percent of S&P 500 companies now explicitly overseeing such spending, compared to 23 percent in 2010. However, this increased oversight and transparency does not appear to correlate with less spending, as companies with board oversight of expenditures spent about 30 percent more in 2010 than those without such explicit policies. This paper examines two years of corporate spending governance data collected on all U.S. companies in the S&P 500 in 2010 and 2011, documenting an increasing role for boards of directors and greater transparency about the process companies use to spend money in politics - both directly in campaigns and indirectly through trade associations and 501(c)4 non-profit groups. It finds voluntary disclosure of money spent remains limited, however, particularly for indirect spending, and inconsistencies between what companies report and data gleaned from public records. The paper also calculates a direct spending footprint for S&P 500 companies - the amount of money companies contributed to national committees and state-level candidates, parties and ballot initiatives, as well as federal lobbying - concluding companies disbursed $1.1 billion in 2010. In addition, the paper provides comparative political spending intensity figures normalized by revenue for different sectors. Two case studies examine ballot initiatives spending in California by PG&E in the 2010 election and indirect corporate support for judicial races in Ohio by Procter & Gamble. Appendices provide an analysis of current investor campaigns for more disclosure of spending and excerpts from corporate policies about independent expenditures.