Shareholder Shove Comes to PUSH
May 4, 2006
BY CHERYL V. JACKSON Business Reporter
The National Legal and Policy Center has stepped up efforts to require corporations to disclose more details about their donations. The goal is to pressure companies to divest from Jackson-led efforts, including the Rainbow/PUSH Citizen Education Fund, which in 2001 provided payments to Jackson's former mistress.
The Church Falls, Va.-based non-profit group hit two shareholders meetings this week -- Boeing on Monday and PepsiCo Inc. on Wednesday.
"Many shareholders would certainly object to their money going to a controversial and divisive figure like Jesse Jackson," said Peter Flaherty, NLPC president. "Shareholders deserve to know where their money is going and for what purpose, especially if it is directly contrary to their interests as shareholders."
The proposal would have required PepsiCo to provide information semi-annually about contributions to non-profit groups, the benefits of the donations and the personnel making such decisions.
PepsiCo, which initially sought to exclude the proposal from the proxy, responded, saying last year it began providing more information on its Web site regarding its corporate giving.
The proposal garnered 6 percent approval from PepsiCo shareholders. A similar proposal got 9.5 percent approval at Boeing. That follows approval by about 10 percent of shareholders at the Citigroup meeting. NLPC also plans to present its proposal to Freddie Mac shareholders.
"We knew our proposals were doomed from the start," Flaherty said. "But we also wanted to raise the issue, and it's been very valuable doing that."
A first-time failed shareholder proposal that gets more than 3 percent votes qualifies for inclusion in the proxy the next year, according to the Securities and Exchange Commission.
Around since 1991 -- NLPC has been critical of Jackson, saying he uses his organizations to "shake down" U.S. corporations.
"We don't consider Jesse Jackson's groups legitimate charities, and we think it's not appropriate for big companies to bankroll him," Flaherty said.
PepsiCo is a contributor to the Citizenship Education Fund, a voter registration-focused organization that is Jackson's largest nonprofit group, with a budget that has been as high as $9 million.
Last year, the Federal Election Commission fined the CEF and the Rainbow/PUSH Coalition $100,000 for campaign finance violations, saying the Democratic National Committee paid the groups $450,000 to offset the costs of a voter registration drive to get more Democrats to the polls during the 2000 presidential election.
Jackson refiled federal tax returns to reflect that money from the CEF was used to pay his mistress, Karin Stanford, and the NLPC focused on those payments as an issue. Also, at a CEF conference in Chicago last June, luncheon speaker Harry Belafonte made remarks that Flaherty said were anti-Semitic.
PepsiCo Chairman Steve Reinemund on Wednesday countered those concerns by saying the company does occasionally support groups whose leadership has views that are not in line with those of the corporation.
Jackson's spokesman did not return a call seeking comment.
Such groups should continue to push for transparency in corporate giving, said Nell Minow, editor of the Corporate Library, a research firm specializing in corporate governance issues.
"Charitable giving should be very, very public," she said. "The only way it benefits the shareholders is if the community knows the company is doing it. It should be seen as part of its branding and marketing campaign." She noted that there are some abuses, including throwing money to organizations that are pet projects of board members, executives or their spouses and kin.
"If the company's got nothing to be ashamed of, what's their problem?"
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