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Thursday, January 21, 2010

Two small thoughts on Citizens United

Just wanted to add these minor notes to the growing agglomeration of commentary:

  1. For a terrific take on the legitimate uses of corporate money to advocate for policy positions, see Jill Fisch's How Do Corporations Play Politics?: The FedEx Story, 58 VAND. L. REV. 1495 (2005).  Fisch does a great job of showing how corporations need to play politics in order to manage their businesses.  I think the same applies to unions, as I argued here.
  2. I predict Citizens United will lead to a new round of shareholder proposals designed to limit corporate political spending.  Shareholders -- particularly institutional shareholders -- will want to limit the money that flows out through theoretically "non-business-related" expenses. 

These two points are semi-contradictory.  Here's an effort to reconcile them: those companies whose contributions seem more ideological (more populist? more conservative?) will find themselves targeted by institutional shareholders, whereas those who play both sides of the street, in a low-key manner, will probably not be.

Posted by Matt Bodie on January 21, 2010 at 06:13 PM in Corporate | Permalink


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I think Jill Fisch's article supports Jeff's point, which is why I find it so frustrating that the Supreme Court finds a union's political expenses to be unrelated to the business of the union.

Posted by: Matt Bodie | Jan 22, 2010 7:14:13 PM

I suspect the SEC won't limit the proposals (why take on that fight, given the SEC's current hangdog public image post Madoff?), but somebody will probably test whether a limitation on political spending relates to ordinary business operations, and thus might permit the exclusion of the proposal under the Rule 14a-8 exceptions.

Posted by: Jeff Lipshaw | Jan 22, 2010 7:04:02 PM

President Obama immediately called on Congress to respond to (and presumably undo or limit) the decision. But seeing as how the decision was explicitly constitutional, it's not clear what Congress could do. Joe's suggestion might be one path, although it raises other issues.

Posted by: Howard Wasserman | Jan 22, 2010 1:03:54 PM

I wonder if the Democratic Congress will attempt to go populist (as a political strategy) and either eliminate corporate personhood or, in a more moderate move, require that corporations obtain "say on political contributions" under the proxy rules (along the lines of "say on pay" but mandatory. Hmmm...

Posted by: Joe | Jan 22, 2010 10:32:35 AM

I linked to an interesting documentary (with a particular viewpoint) on the history and nature of the corporate entity here: http://su.pr/6zIwAD

Posted by: Jeff Yates | Jan 22, 2010 9:00:21 AM

Seems the two small thoughts is same for countries all over the world...

Posted by: SEO 成果報酬 | Jan 22, 2010 1:53:41 AM

Your second point is quite interesting. I tend to come at these issues purely from a First Amendment angle, so this point was definitely not on my radar. Thanks for posting.

Posted by: Lyrissa | Jan 21, 2010 11:03:00 PM

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