Target and Best Buy wasted no time following the Supreme Court's Citizens United decision in July, which granted corporations the right to donate to political causes. However, the two companies didn't count on shareholder backlash.
A terse shareholder statement delivered to Best Buy executive management, which donated $100,000 to an anti-gay political group, stated, "We are concerned that management may use the open door of the Citizens United decision to intervene in numerous controversial political contests that could harm the Best Buy brand. ... Resolved: The shareholders request that the independent members of the Board of Directors institute a comprehensive review of Best Buy’s political contributions and spending processes."
But Target is facing the true wrath of its shareholders. Shareholders wasted no time sounding off on their disapproval of the company's contribution to Minnesota Forward, a conservative group that supports Republican hopeful Tom Emmer. Target CEO Gregg Steinhafel donated $150,000 of shareholder funds without Board or shareholder approval.
True, Steinhafel apologized a week later, but he didn't withdraw his contribution. He even tried, unsuccessfully, to negotiate with the Human Rights Campaign (HRC), but talks quickly broke down. That drew the ire of employees and shareholders, who were enraged at Steinhafel's blatant discriminatory actions. Target shareholders responded, "Ironically, Target has been known for forward-looking policies and benefits for gay and lesbian employees, having an explicit policy that bans discrimination based on sexual orientation and offering domestic partner benefits."
In the wake of this grand debacle, both Target and Best Buy shareholders have passed resolutions which institute a comprehensive review of the companies' political contributions and spending, including:
• The criteria used for such contributions and the broader impact contributions may
have on the company’s reputation, public image with consumers and business sales
and profitability, including how hoped-for benefits are balanced with the broader
costs of endorsing a candidate whose policies may conflict with Target’s publicly
expressed values;
• Direct or indirect contributions to candidates and issue ads aimed at affecting political
races;
• Support for ballot initiatives at the state level;
• Contributions through trade associations such as the U.S. Chamber of Commerce
and tax exempt organizations (e.g. 501(c)4s and 527s) which can redistribute
contributions for political purposes without having to disclose such transactions; and
• Oversight processes by management and the Board
In related news, Target profits are reportedly up 14.3%, largely due to the the company's decision to give discounts to Target credit card users.
What do you think? Should corporate CEO's be free to contribute shareholder funds to whatever cause they deem worthy, or should they have to pass muster with the Board and shareholders first?
Comments
Corporations such as Best Buy and Target already enjoy more access to government decision-makers than citizens. To support a particular point of view such as they have with corporate donations indicates to me they are only interested in customers that support their corporate political views...and I won't be patronizing either of them as a result. I didn't know that household items and electronics had a political slant....but they're welcome to market themselves to people who support their corporate views. Just don't expect the rest of us to support them as a result.
Yes, they should be allowed to contribute any way they want as long as they accept they are likely putting a successful company out of business and that the stock holders can take away every dime they had ever been paid to enhance stockholder equity. Otherwise, they should just run their business to the best of their ability and keep their personal politics to themselves.
They should have to have the board and share holders permission. The CEO does not own the company, the share holders do. The CEO is using other peoples money for their own politics and hurthing the future profits of the brand.
No, CEOs are beholden to their shareholders. It is the same as a CEO giving $150,000 to his wife without asking the shareholders. It's not the CEO's money, it;s the shareholders money.
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