Subject: California presses for disclosure of political donations - FT
From: "Michael Andrews" <[email-masked]>
To: "Hunter Biden" <[email-masked]>, "Eric Schwerin" <[email-masked]>
Date: Thu, 2 Jun 2011 09:59:41 -0400

California presses for disclosure of political donations
By Dan McCrum and Nicole Bullock in New York
Published: June 2 2011 00:25 | Last updated: June 2 2011 00:25
Bill Lockyer, the state treasurer for California, has asked the  
state’s leading public pension funds, the two largest such asset  
managers in the US, to use their influence to press for full  
disclosure of political donations by US companies.

In letters to the California Public Employees’ Retirement System and  
the California State Teachers’ Retirement System on Wednesday, Mr  
Lockyer, who as treasurer sits on the board of both funds, requested  
that Calpers and Calstrs develop formal corporate governance policies  
on political campaign spending.

The move is likely to add to pressure on boards to avoid overtly  
political spending. “Political donations are a no-win for a company  
because some of your employees, customers and shareholders are going  
to be annoyed whatever happens,” says John Wilcox of Sodali, a  
corporate governance consultancy.

“Studies have shown a negative link between a company’s political  
spending and the resulting value of the firm. As fiduciaries it is our  
responsibility to ensure that investors have the information they  
need,” said Mr Lockyer.

Calpers and Calstrs, which together manage $389bn in pension assets,  
have a long history of investor activism.

This year they have campaigned for direct election of board members,  
winning a high-profile victory at Apple’s shareholder meeting in  
February.

Last year’s Supreme Court ruling, known as Citizens United, and lower  
court rulings influenced by the decision have given corporations and  
other outside groups new power to sponsor advertisements that directly  
support or attack political candidates. They have eliminated rules  
that used to prohibit the groups from running direct ad campaigns in  
the last 60 days before an election.

“Increasingly, corporations are using such groups in an attempt to  
cloak massive spending in secrecy through “independent expenditure”  
campaigns, many of which are notorious for making unfair and unfounded  
personal attacks,” said Mr Lockyer in the letters.

“In principle and practice, Calstrs has long supported the disclosure  
of political spending by corporations,” said a spokesman for the  
pension fund, who also said that Calstrs supports shareholder  
proposals calling for disclosure of company policy on campaign  
contributions and board oversight on political spending. Calpers  
declined to comment.

Mr Lockyer’s new campaign follows a proxy season in which investors  
have embraced new powers granted by the Dodd-Frank financial reform  
legislation. So-called “say-on-pay” rules granted shareholders an  
advisory vote on executive compensation that has been used to voice  
concern at unpopular pay practices.

Last year, as concerns about the financial health of California  
mounted, Mr Lockyer demanded that banks earning fees for underwriting  
its bond sales report their activity in credit default swaps, which  
allow investors and banks both to hedge and speculate on the  
likelihood of default.

California is the largest issuer of US state debt. His salvo came as  
the derivatives industry came under scrutiny for fuelling early bouts  
of distress in the Greek debt markets.

This year, Mr Lockyer moved to stop California’s bond underwriters  
from passing on their lobbying costs to the state by way of their bond  
sales and to recoup money used to make these payments from previous  
sales.