10 Dec 2020 Corporations Try to Silence Conservatives

In their opposition to National Center shareholder proposals for the coming year, corporate giants Disney and Starbucks “have now provided proof” that they are in the business of “openly seeking to strip civil and economic rights from moderates and conservatives who dare to speak their minds.”

Free Enterprise Project (FEP) Deputy Director Scott Shepard, in his weekly Townhall commentary, chronicles FEP’s efforts to get shareholder proposals placed in these companies’ proxy materials for their 2021 annual investor meetings. He describes the shockingly revealing and politicized responses the companies have given for wanting to block FEP’s apolitical proposals.

Scott describes how these companies are compromising the normally sedate and rational process of responding to shareholder proposals:

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.

Disney and Starbucks argue that FEP is out of the mainstream because – among other things – the National Center opposes the radical Black Lives Matter agenda. This is apparently enough, in their opinion, to invalidate a perfectly legitimate proposal:

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.)”

If successful, this line of argument could have a devastating effect on the “statutory property rights” of anyone whose beliefs fall to the right of Alexandria Ocasio-Cortez and who might want to engage with a corporation.

“Companies could ignore neutrally drawn proposals,” Scott contends, “because they ‘know’ conservatives are really up to the evil of supporting policy positions favored by half the country.”

Scott calls this “abhorrent behavior that should be run out of the public square.”

To read all of Scott’s commentary – “Disney, Starbucks to SEC: Lock Conservatives Out” – at the Townhall website, click here.