06 May 2019 Free Enterprise Project Blocks Leftist Efforts to Defund Pro-Business Associations
Innovative Shareholder Proposal Strategy Thwarts Anti-Capitalist As You Sow Network
FEP Holds Teamsters Union and NY Comptroller at Bay
Indianapolis, IN/Washington, D.C. – At today’s annual meeting of Eli Lilly shareholders, the National Center for Public Policy Research’s Free Enterprise Project (FEP) – the nation’s leading proponent of free-market investor activism – deployed an innovative strategy to block an anti-free speech shareholder proposal designed to force the pharmaceutical leader to divest from pro-business associations.
Today’s victory comes on the heels of Pfizer’s April 25th shareholder meeting, during which FEP deployed a similarly successful tactic.
“Today was a big victory for free speech and free enterprise,” said National Center General Counsel and FEP Director Justin Danhof, Esq., the visionary behind the groundbreaking proposal. “The left’s desire to turn America into a socialistic wasteland is strong, but today we scored a win for capitalism and American industry.”
U.S. Securities and Exchange Commission (SEC) rules state that a company needs only accept one shareholder proposal for its proxy statement if it receives two on the same topic. That rule further states that the company must accept the first of those similar proposals that it receives. Danhof identified Pfizer and Eli Lilly as companies that regularly received anti-free speech proposals from organizations in the socialist-leaning As You Sow network. He then filed proposals at these companies with similar operative language but instead suggesting that Pfizer and Lilly educate their investors about the benefits of memberships in free-market pro-business organizations. Danhof’s proposals were both submitted prior to the submission of two liberal proposals (one from the Teamsters and one from the NY Comptroller) and were therefore published on Pfizer’s and Lilly’s proxy statements – just as he predicted.
At the meeting, Danhof detailed the deceptive and hypocritical work of the As You Sow socialists. He said:
The As You Sow network has tried to co-opt Lilly’s investors into its anti-free speech effort in prior years, and its proposals have received upwards of 25 percent support. That’s appallingly high. Many investors were perhaps misled by As You Sow’s calls for so-called transparency and accountability. We hope investors now understand this network’s extremely partisan nature and deceptive tactics.
This network complains that corporate relationships with groups such as the U.S Chamber of Commerce, the American Legislative Exchange Council (ALEC), the Business Roundtable, the National Association of Manufacturers. PhRMA and other pro-business organizations expose companies such as Lilly to “reputational risk.” Considering that the network regularly smears these free-market groups, this is a circular argument with no basis in fact. Groups such as the Chamber and ALEC promote a fair economic environment devoid of excessive government regulation and onerous corporate taxation. Such an environment would help, not harm, Eli Lilly. But that’s just what the Comptroller and As You Sow want – to end American capitalism by destroying private enterprise.
Danhof’s full statement, as prepared for delivery, is available here.
Similarly, at Pfizer’s recent annual meeting, Danhof noted:
The Teamsters are part of a broad network of liberal groups attempting to use American corporations to silence speech and defund advocates of free enterprise. Following the U.S. Supreme Court’s 2010 Citizens United decision, this network has filed hundreds of resolutions complaining about an alleged lack of transparency and accountability in corporate lobbying and political activity. However, such groups never express concern about the billions of corporate dollars that go to fund liberal causes and politicians. Herein lies the hypocrisy of the proposal. This liberal network abhors corporate speech when it is perceived to skew to the political right. Yet it remains silent when speech supports favored leftist causes.
Danhof first utilized this approach last year to block liberal proposals from the General Electric and Duke Energy proxy statements, experiencing similar success. His innovative approach received significant media attention, including a feature article in the Wall Street Journal.
Journal reporter Mara Lemos Stein wrote:
If you can’t beat them, join them—or at least steal their script.
Justin Danhof a conservative shareholder advocate, is harnessing a regulatory “first-come, first-served” provision to sideline left-leaning investors from proxy ballots by lodging nearly identical proposals, but getting them in first. The tactic is helping Mr. Danhof promote and engage with company management on conservative social-policy issues.
Stein’s article went on to note just why FEP’s strategy is more important than ever:
Shareholders filed 1,347 resolutions focused on social policy and the environment with Fortune 250 companies in the decade ended in 2015, according to ProxyMonitor.org.
None of them garnered majority shareholder support.
That’s starting to change. A proposal seeking greater disclosure of political spending by Fluor Corp. passed in 2016. And last year, fund managers BlackRock Inc. and Vanguard Group voted with the proponents of climate-risk disclosure at Exxon Mobil Corp. and Occidental Petroleum Corp. among others.
The full Wall Street Journal article is available here (paywall protected).
“We will continue to fight in the shareholder arena for the voices of free enterprise and limited government until our last breath. But we won’t win this fight alone,” said Danhof. “The left is working tirelessly in this arena to defund effective conservative organizations. We have blocked a handful of their efforts to bankrupt good limited-government organizations over the past few years; however, each year As You Sow expands its massive war chest and presses on. We can’t be the only voice of opposition. I suggest conservatives start taking this fight seriously. It’s time to pick a strategic position and man a post.”
Today’s Eli Lilly meeting marks the 13th time FEP has participated in a shareholder meeting in 2019.
Launched in 2007, the National Center’s Free Enterprise Project focuses on shareholder activism and the confluence of big government and big business. Over the past four years alone, FEP representatives have participated in over 100 shareholder meetings – advancing free-market ideals about health care, energy, taxes, subsidies, regulations, religious freedom, food policies, media bias, gun rights, workers’ rights and other important public policy issues. As the leading voice for conservative-minded investors, it annually files more than 90 percent of all right-of-center shareholder resolutions. Dozens of liberal organizations, however, annually file more than 95 percent of all policy-oriented shareholder resolutions and continue to exert undue influence over corporate America.
FEP activity has been covered by media outlets including the New York Times, Washington Post, USA Today, Variety, the Associated Press, Bloomberg, Drudge Report, Business Insider, National Public Radio and SiriusXM. FEP’s work was prominently featured in Wall Street Journal writer Kimberley Strassel’s 2016 book The Intimidation Game: How the Left is Silencing Free Speech (Hachette Book Group).
The National Center for Public Policy Research, founded in 1982, is a non-partisan, free-market, independent conservative think-tank. Ninety-four percent of its support comes from individuals, less than four percent from foundations and less than two percent from corporations. It receives over 350,000 individual contributions a year from over 60,000 active recent contributors. Sign up for email updates here. Follow us on Twitter at @FreeEntProject and @NationalCenter for general announcements. To be alerted to upcoming media appearances by National Center staff, follow our media appearances Twitter account at @NCPPRMedia.