Financial Services Passes Corporate Reporting BillsBy
The House Financial Services Committee passed two corporate reporting bills at the end of February 2020. The Shareholder Political Transparency Act (H.R. 5929) would require public companies to disclose to the U.S. Securities & Exchange Commission (SEC) and investors the amount, date, and nature of the company’s expenditures for political activities including lobbying.
And the Workforce Investment Disclosure Act (H.R. 5930) would enable the SEC to require public companies to disclose such things as information about the voluntary turnover or retention rate, the involuntary turnover or retention rate, the internal hiring rate, the internal promotion rate, data on diversity, and any policies and audits related to diversity. Both bills passed the committee by a vote of 33-25 along party lines, with Democrats voting for and Republicans against the bills.
The U.S. Chamber of Commerce has publicly expressed opposition to the bills, while shareholder advocacy groups supported them. In a post on the Harvard Law School Forum on Corporate Governance, Neil Bradley, executive vice president and chief policy officer at the U.S. Chamber of Commerce, argued the workforce bill would mandate reports on information that in many cases isn’t material to a reasonable investor.
He called the shareholder act an attempt “to glean information to advance other interests through name-and-shame tactics.” He noted from 2010 to 2019, of the 510 political and lobbying spending disclosure proposals submitted to Fortune 250 companies, only two have ultimately received majority support (0.3%). “It is increasingly clear that a super-majority of shareholders, when given the opportunity, reject the disclosure of this information as not material,” he wrote.
In contrast, California Public Employees’ Retirement System (CalPERS), in a letter supporting the bill, said, “political expenditure disclosure is consistent with the SEC’s requirement for public companies to disclose meaningful financial information and would encourage prudent use of corporate shareowner resources for political activities.”