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- Title
Shareholder Proposal Settlements and the Private Ordering of Public Elections.
- Authors
HAAN, SARAH C.
- Abstract
Reform of campaign finance disclosure has stalled in Congress and at various federal agencies, but it is steadily unfolding in a firm-by-firm program of private ordering. Today, much of what is publicly known about how individual public companies spend money to influence federal, state, and local elections--and particularly what is known about corporate "dark money"--comes from disclosures that conform to privately negotiated contracts. The primary mechanism for this new transparency is the settlement of the shareholder proposal, in which a shareholder trades its rights under SEC Rule 14a-8--and potentially the rights of other shareholders--for a privately negotiated social policy commitment by corporate management. Settlements of campaign finance disclosure proposals are memorialized in detailed private agreements that set the frequency, format, and substance of disclosure reports; are enforced by private actors; and typically are not available to other shareholders, corporate stakeholders, or the public. Proposal settlements are producing a body of private disclosure law that increases corporate transparency to advance First Amendment values and is exempt from First Amendment scrutiny. The disclosure standards themselves are a mixed bag: effective at filling some gaps in public campaign finance disclosure law, but inadequate to make corporate electoral spending transparent in advance of elections. As a form of private electoral regulation, the proposal settlement mechanism raises issues of democratic transparency, participation, accountability, and enforcement. This Article challenges the characterization of proposal settlements as "voluntary" corporate self-regulation, provides a framework for understanding settlement-related agency costs, and shows how settlement subverts the traditional justifications for the shareholder proposal itself. Solutions that address the democratic and corporate governance problems of settlement largely overlap, suggesting a path forward.
- Subjects
SELECTION &; appointment of corporate directors; STOCKHOLDERS; PUBLIC companies; CORPORATE governance; SOCIAL policy; UNITED States. Constitution. 1st Amendment
- Publication
Yale Law Journal, 2016, Vol 126, Issue 2, p262
- ISSN
0044-0094
- Publication type
Article