Board Oversight of Political Contributions Is Gradually Becoming a Corporate Governance Standard

On September 24, 2014, the Center for Political Accountability and the Zicklin Center for Business Ethics Research published their fourth annual index of corporate political disclosure and accountability (2014 Index), which focuses on political spending disclosure of the top 300 companies in the S&P 500 Index. The 2014 Index reviews companies’ political transparency and oversight practices and policies disclosed on their websites and describes:

 

  • the ways that companies manage, oversee and disclose political spending;
  • the specific spending restrictions that many companies have adopted; and
  • the policies and practices that need the greatest improvement.

The 2014 Index demonstrates that a majority of reviewed companies continues to have some level of board oversight of their political contributions and expenditures; however, the percentage of such companies is going down as the number of reviewed companies increases (the 2014 Index reviewed 300 top companies in the S&P 500 Index compared to 200 reviewed companies in 2012 and 2013). For example,

  • 55% of companies said that their boards of directors regularly oversee corporate political spending compared to 62% of companies in 2013 and 56% in 2012;
  • 37% of companies said that a board committee reviews company policy on political spending compared to 57% of companies in 2013 and 49% in 2012; and
  • 44% of companies said that a board committee reviews company political expenditures compared to 56% of companies in 2013 and 45% in 2012.

Board Oversight of Political Contributions Is Steadily Rising

In September 2013, the Center for Political Accountability and the Zicklin Center for Business Ethics Research published their third annual index of political accountability and disclosure (2013 Index), which focuses on political spending disclosure of the top 200 companies in the S&P 500 Index. The Index reviews companies’ policies disclosed on their websites and describes:

  • the ways that companies manage and oversee political spending;
  • the specific spending restrictions that many companies have adopted; and
  • the policies and practices that need the greatest improvement.

The 2013 Index demonstrates that of the 195 companies reviewed in both 2012 and 2013, 78% of companies improved their overall scores for political disclosure and accountability.  In particular, data from the 2013 Index indicates that a growing number of companies have some level of board oversight of their political contributions and expenditures.  For example,

  •  62% of companies said that their boards of directors regularly oversee corporate political spending in 2013, compared to 56% in 2012;
  • 57% of companies said that a board committee reviews company policy on political spending in 2013, compared to 49% in 2012; and
  • 56% of companies said that a board committee reviews company political expenditures in 2013, compared to 45% in 2012.