More than a third of votes cast at Verizon Communications’ recent AGM backed a shareholder proposal seeking information about the company’s lobbying activities.
The result – 34.6 percent of votes cast were for the resolution, according to an SEC filing – was not a majority but it marks a level of support widely seen as significant by governance professionals. In a US presidential election year, Verizon is not the only company where investors are seeking information about corporate lobbying.
The proposal filed with Verizon asked the company to prepare an annual report disclosing:
- ‘1) Company policy and procedures governing lobbying, both direct and indirect, and grassroots lobbying communications
- ‘2) Payments by [the company] used for (a) direct or indirect lobbying or (b) grassroots lobbying communications, in each case including the amount of the payment and the recipient
- ‘3) Verizon’s membership in and payments to any tax-exempt organization that writes and endorses model legislation
- ‘4) Description of management’s decision-making process and the board’s oversight for making payments described in sections 2 and 3 above.’
The proponents (Alyson Pytte and an unnamed co-sponsor) write in a supporting statement: ‘Full disclosure of Verizon’s lobbying activities and expenditures is needed to assess whether [the company’s] lobbying is consistent with its expressed goals and shareholder interests.’ The statement notes that Verizon spent more than $166 mn from 2010 to 2022 on federal lobbying, in addition to lobbying ‘extensively’ at the state level.
‘Companies can give unlimited amounts to third-party groups that spend millions on lobbying and undisclosed grassroots activity,’ the proponents write. ‘Verizon fails to disclose its payments to trade associations and social welfare groups… or the amounts used for lobbying, to shareholders.’
The supporting statement argues that although the company publicly supports addressing climate-change groups, it appears to have taken opposite lobbying stances. It adds: ‘Verizon’s lack of disclosure presents reputational risks when its lobbying contradicts company public positions.’
A proposal worded in essentially the same way received 39.4 percent of votes cast at Goldmans Sachs’ AGM on April 24. That resolution was filed by John Chevedden and Oblate International Pastoral Investment Trust.
Board objections
Verizon’s board had urged shareholders to vote against the lobbying proposal, writing in the company’s proxy statement: ‘Verizon is committed to responsible engagement in the political process, and we maintain a strong reputation for responsible political spending with a ranking in the first tier of companies in the CPA-Zicklin Index of Corporate Political Disclosure and Accountability.
‘We provide shareholders with information on lobbying activity and memberships in third-party organizations… including trade associations and 501(c)(4)s) in our political engagement report and intend to revise the information we provide on significant memberships by our 2024 mid-year report and will disclose an estimate of the amount of Verizon’s payments used for lobbying activities. The board believes the additional report requested by the proponent, containing much of the same information we already disclose or plan to disclose, would not provide value to shareholders.’
The board writes that Verizon is ‘affected by a wide variety of government policies that significantly impact our business’ and that given the highly regulated and competitive nature of its industry, the company needs to participate in the political process.
‘We also make our voice heard through participation in trade associations and by supporting advocacy organizations,’ the board states. ‘Verizon supports these organizations for a variety of reasons, ranging from our interest in the community to access to industry expertise or common goals and interests on key strategic policy and business issues. We recognize that we may not always agree with every position of each organization or its other members.’
The board says its corporate governance and policy committee oversees Verizon’s participation in the political process including political spending, memberships and trade associations and reputational risk.
A request for comment from Verizon on the vote was not returned immediately.
Ben Maiden
Ben Maiden is the editor-at-large of Governance Intelligence, an IR Media publication, having joined the company in December 2016. He is based in New York. Ben was previously managing editor of Compliance Reporter, covering regulatory and compliance...
