At IBM's shareholder meeting in North Charleston Tuesday, a group of investors proposed that the company disclose all of its spending on political lobbying, whether direct or indirect. Two separate but similar proposals would have demanded that the company disclose its giving to trade associations in addition to direct lobbying groups, but neither one passed when put to the vote.
IBM spent $31.1 million on federal lobbying from 2007 to 2011, according to the Center for Responsive Politics, but the company has not publicized the amount of dues it pays to trade associations like the U.S. Chamber of Commerce and the American Legislative Exchange Council (ALEC), which influence state politics through lobbying and the writing of model legislation. ALEC in particular has come under scrutiny recently, with The New York Times publishing an article Saturday calling the nonprofit organization a conservative "stealth business lobbyist."
In South Carolina, as in many other states, the "Stand Your Ground" gun laws are remarkably similar to model legislation that ALEC operatives wrote. And in the wake of teenager Trayvon Martin's February shooting death in Sanford, Fla., where his shooter is claiming protection under similar gun laws, major companies including Coca-Cola and Kraft Foods have withdrawn their membership in ALEC. For its part, ALEC maintains that its role is to help legislators meet with business leaders and other constituents who are interested in limited government and free-market capitalism.
During the meeting at the Charleston Area Convention Center, representatives for two Boston-based asset management firms proposed newly expanded transparency measures (see page 71), but when stockholders cast their ballots — one vote per share of IBM stock owned — neither proposal made the cut. One of the proposals, from the Green Century Balanced Fund (which owns 0.18 percent of the company's shares), called on the company to release an annual report on its lobbying policies as well as its "membership in and payments to any tax-exempt organization that writes and endorses model legislation."
Local investment company business developer Brady Quirk-Garvan, who acted as a proxy for Green Century, says the proposal got just shy of 10 percent of the vote — better than expected, actually. "Neither resolution passed, but that's not unexpected," he says. "I think it was important to push the issue and say there is a large group of investors that want to know what trade groups you're a part of and what associations you're paying dues to that then go out and lobby Congress."
Before any ballots were cast, IBM's board of directors recommended that investors vote against both proposals. In response to Green Century's proposal, the board wrote to investors that, while the company does engage in lobbying, it has a longstanding policy against making political contributions of any kind.
"IBM does not engage in grassroots lobbying as defined by the proposal and already discloses all lobbying as required by law," the board wrote in a letter to investors. "Moreover, IBM does not provide any financial support to political parties or candidates, directly or indirectly. Because of IBM's policy on political contributions and expenditures, IBM does not have a Political Action Committee and does not engage in independent expenditures or electioneering communications as defined by law."
Quirk-Garvan says that while the proposal failed to get the popular vote, it did succeed in getting the issue on the table. In that respect, he says it would be fair to compare the firm's efforts to that of a third-party candidate. Green Century plans to make similar proposals to the shareholders of other major corporations, including UPS on May 3.
"IBM is overall a pretty good company," Quirk-Garvan says. "They do a lot environmentally that makes us really happy, but they could be doing a little better on this issue. We're there to keep pushing them down the road."