Occidental Political Spending 2011
|Company||Occidental Petroleum Corporation|
|Filer||Green Century Capital Management|
|Sector||Oil and Gas|
|Subject(s)||Climate Change; Political Spending; Public Policy|
|Resolved Clause Summary||Political spending review|
|Supporting Memo||Download PDF|
Whereas: The issue of “political spending” by companies is increasingly controversial heightened by the Citizens United Supreme Court decision which allows companies to make independent expenditures for or in opposition to candidates.
Using shareholder money to support a controversial ballot initiative in California, added to the controversy.
In Occidental’s case, the company’s significant involvement in political campaigns included support for California Initiative Proposition 23. Occidental contributed at least $300,000 promoting Proposition 23 which would suspend a law requiring companies to cap their emissions and cut carbon in gasoline to protect the environment until state unemployment falls to and remains at 5.5% or lower for 4 consecutive quarters.
This requirement would have the effect of killing the law as this happened only 3 times over the last 40 years. The debate about Proposition 23 split the business community and many oil majors remained neutral.
We believe the attempt to roll back this bill which sets an economy-wide cap on greenhouse gases will harm employment and investment in clean technologies, a growth area for California. It would also cause California to lose investment and jobs to countries like China or Germany that have strong commitments to clean energy policy.
Some investors are profoundly concerned that shareholder funds are being used in confrontational and controversial political initiatives of this sort. Furthermore, they are concerned management may use the open door of the Citizens United decision to intervene in controversial election contests that could harm the Occidental brand. In the past 5 years, investors increasingly voted for political spending disclosure resolutions, as demonstrated by the average 30% vote for such proposals in 2010. Disclosure and oversight of political spending, both directly and indirectly, is considered good governance.
Since Occidental management is using shareholder monies for political spending on initiatives and potentially for candidates, we believe it prudent to undertake a comprehensive review of the implications of such expenditures on our company’s reputation and business competitiveness.
In the aftermath of Citizens United, we believe the Board should review Occidental’s policies and practices regarding political spending and report results to shareowners.
Resolved: The shareholders request that the independent members of the Board of Directors institute a comprehensive review of Occidental’s political expenditures and spending processes and present a summary report for investors by September 2011. Items for review include
• The process used for determining the approval of expenditures supporting or opposing candidates and an assessment of the impact such expenditures may have on the company’s reputation, public image, business sales and profitability;
• Direct or indirect expenditures, including payments made to trade associations, such as the U.S. Chamber of Commerce, social welfare organizations and political organizations, supporting or opposing candidates or for issue ads aimed at affecting political races.
• Expenditures for state-level ballot initiatives, including an analysis of its impact on the company and the environment of any such initiative;
• Oversight processes by management and Board for all political spending.