08 Dec 2020 Disney, Starbucks To SEC: Lock Conservatives Out

Conservatives, libertarians and even moderates – the whole center-right majority of the United States – grow increasingly worried that corporate social activism seeks to shut them out of business and civic life.

Scott Shepard

Disney and Starbucks have now provided proof. The companies recently asked the Securities & Exchange Commission (SEC) to let them reject neutrally drawn shareholder proposals simply because the organization that submitted them dares to advance right-of-center policy positions.

The Securities Exchange Act of 1934 allows investors to offer proposals for vote at companies’ annual shareholder meetings. SEC rules govern this process, including details such as how much, or long, a proponent must hold stock before proposing; what matters may be raised in shareholder proposals; and how.

These rules are neutral regarding the proposals’ subject-matter and proponents’ personal policy preferences, and require neutral application by SEC staff. The First Amendment and every emanation and penumbra of our constitutional order forbid making federally established economic and civil rights contingent upon which side citizens take in questions of governance or public policy.

Yet this is exactly what Disney and Starbucks just asked the SEC staff to do.

At the National Center for Public Policy Research, through our Free Enterprise Project, we file shareholder proposals to thwart corporate wokeness. Our proposals remind corporate America that the majority of their customers and shareholders would prefer they remain neutral about passing political and social controversies. We think this very much benefits the companies themselves, and therefore company executives, who by law work not as unelected private policy departments, but as stewards for the companies’ shareholders.

We work nearly alone on our side of the ledger. Each year we submit about five percent of the total shareholder proposals offered. Nearly all the rest are offered by a coalition of explicitly liberal organizations bent on forcing corporations radically left on a whole array of issues, from race- and sex-conscious hiring to radical climate positions to the adoption of socialistic corporate-governance models.

But our lonely involvement is too much for Disney and Starbucks. We submitted to each a proposal asking the companies to report annually on their charitable giving, the reasons for the giving, the efforts the company was making to make sure that donations were being used as intended, and the results of that giving. We modeled our proposals on previous proposals that the SEC staff had deemed appropriate.

Disney’s and Starbucks’ responses bemoaned the burden the reporting would make for these giant companies. But these arguments were nonsense, as the companies’ managers have legal duties to know what they’re doing, and not to do things that they can’t keep track of.

But the focus of their argument was this: even though our proposals were neutrally drawn to apply to all donations, and were merely predicated on the facts of this summer’s controversies and the corporate response to them, and though they followed previously approved proposal language closely, they should be rejected because they came from an organization that dares to promote right-of-center policy positions publicly. As Disney’s reply put it, “when read with relevant additional context of [our] public objections” to leftward corporate drift “it is evident that the Proposal is a veiled effort to pressure [Disney] to prevent charitable contributions being made to specific types of organizations (in [Disney’s] case, organizations supporting social justice.)”

Our biggest public policy sin? We don’t bend our knees to the Black Lives Matter (BLM) organization. Although our proposals never mention BLM, the companies noted our work opposing BLM’s explicitly revolutionary agenda and asked SEC to reject our proposals for that reason. Disney and Starbucks essentially state that if you oppose defunding the police and disrupting the nuclear family, you should be denied your investor rights.

If Disney’s and Starbucks’ objections to our proposal prove successful, all right-of-center shareholders will lose statutory participation rights. Companies could ignore neutrally drawn proposals because they “know” conservatives are really up to the evil of supporting policy positions favored by half the country.

The SEC staff must not violate the Constitution and its solemn duties by sanctioning this new iteration of cancel culture. But were it to, then we would have to recognize that the attempt to crush dissent from leftwing doctrine has moved beyond AOC’s cretinous enemies lists to direct contravention of legal norms.

Disney and Starbucks are actively and openly seeking to strip civil and economic rights from moderates and conservatives who dare to speak their minds. That’s the abhorrent behavior that should be run out of the public square.

Scott Shepard is a fellow at the National Center for Public Policy Research and Deputy Director of its Free Enterprise Project.