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Shareholder groups seek to limit corporate contributions

Shareholder groups aim to keep a lid on companies’ political spending in the wake of Citizens United v. the Federal Election Commission, a case in which the Supreme Court eased restrictions on corporate campaign spending.

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•Concerned par­ties are also supporting congressional bills that address corp­orate political spending. In March, for example, the Council of Institu­tional Investors and other groups testified at a congressional hearing in favor of the Share­holder Protection Act, which would require greater disclosure and accountability of corporate political spending.

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For years, shareholders have been filing general resolutions asking companies, for example, to disclose their political contributions and directors' oversight of these outlays. As of early March, 46 resolutions on corporate political spending had been filed for 2010, versus 48 for all of last year, according to proxy advisory firm RiskMetrics Group Inc.

In the aftermath of the Citizens United case, however, one institutional investor is asking for something more ambitious. In February, the $129.4 billion New York State Common Retirement Fund in Albany asked American International Group (AIG) to give shareholders a vote on its political spending for the prior year, a request the fund calls unprecedented. "It wouldn't be a binding ratification," says Robert Whalen, spokesman for Thomas DiNapoli, sole trustee of the pension fund. "But we hope it would be a guide to the company's [future] political spending."

(Separately, the fund is the focus of a state probe of alleged kickbacks, but that investigation involves former state officials, not the current trustee.)

AIG spokesman Mark Herr had "no comment" on the Common Fund's shareholder resolution. He pointed out that AIG has "not made any political contributions at the federal level since 2008."

No one knows how much the Citizens United ruling will boost political spending on ads or other communications. The Center for Responsive Politics in Washington projects total spending (from all sources, not just corporate) of more than $3.7 billion in this year's election cycle. That excludes any Citizens United effect, says CRP spokesman Dave Levinthal.

Some investors particularly fear heavy spending by trade associations or other advocacy groups. One oft-cited rationale: In a January speech even before the Citizens United ruling, Thomas Donohue, head of the US Chamber of Commerce, said the chamber plans "the largest, most aggressive voter-education and issue-advocacy effort in our nearly 100-year history." (Chamber officials did not respond to requests for comment.)

Some other investors say many corporations will remain cautious in this area.

"Investors are concerned about the results of the Citizens United case. But so are many companies," says Timothy Smith, senior vice president of Walden Asset Management in Boston. "Political spending can be controversial and polarizing. And if a company has a brand name, it may not want to be involved in controversies regarding political contributions."