The Supreme Court Had Its Say. Now Let Shareholders Decide.

By JOHN C. BOGLE
NYT

Valley Forge, Pa.

SHOULD Home Depot’s board report each year on the company’s political policies and spending? In a groundbreaking vote at the company’s June 2 annual meeting, Home Depot’s shareholders will have the chance to vote on a nonbinding resolution of support for the company’s policies on, and future plans for, political contributions.

The vote was made possible because the Securities and Exchange Commission rightly decided in March to allow proxy proposals that require public companies to permit their shareholders to weigh in on their political spending.

This means that, notwithstanding the Supreme Court’s decision last year that laws limiting corporate political contributions violate constitutional free speech principles, the game is far from over. Shareholders — not self-interested corporate managers — should, and can, decide policies on corporate political contributions.

What makes this strengthening of shareholder rights particularly important is that over the past 50 years control of corporate America has shifted from individual stockholders to institutional stockholders. But these institutional investors have been unwilling to challenge political activities by corporate boards, even when those activities are not in their shareholders’ interests.

(More here.)