From Berkshire Hathaway's 2017 annual meeting proxy statement:
Mr. Tom Beers and Ms. Mary Durfee are the joint owners of 100 shares of Class B Common Stock and have given notice that a representative of Clean Yield Asset Management intends to present for action at the meeting the following proposal.
Resolved, that the shareholders of Berkshire Hathaway Inc. (“Company”) hereby request that the Company provide a report, updated semiannually, disclosing the Company’s:
1. Policies and procedures for making, with corporate funds or assets, contributions and expenditures (direct or indirect) to (a) participate or intervene in any political campaign on behalf of (or in opposition to) any candidate for public office, or (b) influence the general public, or any segment thereof, with respect to an election or referendum.
2. Monetary and non-monetary contributions and expenditures (direct and indirect) used in the manner described in section 1. above, including:
a. The identity of the recipient as well as the amount paid to each; and
b. The title(s) of the person(s) in the Company responsible for decision-making. The report shall be presented to the board of directors or relevant board committee and posted on the Company’s website within 12 months from the date of the annual meeting.
Supporting Statement
As long-term shareholders of Berkshire Hathaway, we support transparency and accountability in corporate spending on political activities. These include any activities considered intervention in any political campaign under the Internal Revenue Code, such as direct and indirect contributions to political candidates, parties or committees; ballot initiatives; independent expenditures; or electioneering communications on behalf of federal, state or local candidates.
Disclosure is in the best interest of the company and its shareholders and critical for compliance with federal ethics laws. Moreover, the Supreme Court’s Citizens United decision recognized the importance of political spending disclosure for shareholders when it said, “[D]isclosure permits citizens and shareholders to react to the speech of corporate entities in a proper way. This transparency enables the electorate to make informed decisions and give proper weight to different speakers and messages.” Gaps in transparency and accountability may expose the company to reputational and business risks that could threaten long-term shareholder value.
According to publicly available data, Berkshire has contributed at least $55,976 in corporate funds since the 2004 election cycle. (CQ: http://moneyline.cq.com and National Institute on Money in State Politics: http://www.followthemoney.org).
But relying on publicly available data may not provide a complete picture of a company’s political spending. For example, the Berkshire Hathaway’s payments to trade associations used for political activities are undisclosed and unknown. In some companies, corporate managers do not know how trade associations use their company’s money politically. The proposal asks Berkshire Hathaway to disclose all of its political spending, including payments to trade associations and other tax exempt organizations used for political purposes. This would bring it in line with a growing number of leading companies, including Capital One, JP Morgan Chase, and Visa, that support political disclosure and accountability and present this information on their websites.
The Company’s Board and its shareholders need comprehensive disclosure to be able to fully evaluate the political use of corporate assets. We urge your support for this critical governance reform.
THE BOARD OF DIRECTORS UNANIMOUSLY FAVORS A VOTE AGAINST THE PROPOSAL FOR THE FOLLOWING REASONS:
The Board of Directors does not believe that the reporting of Berkshire’s political contributions is an appropriate use of its resources and recommends that our shareholders vote against this proposal. Berkshire and its subsidiaries fully comply with all disclosure requirements pertaining to political contributions under federal, state and local laws. The Parent Company makes no political contributions and Mr. Buffett does not instruct the managers of Berkshire subsidiaries to make any political contributions. During the past several years, political contributions of Berkshire subsidiaries have been less than $10 million per year or less than 0.1% of Berkshire’s consolidated annual operating expenditures.
Additionally, we do not agree with the proponents assertion that gaps in transparency and accountability may expose the company to reputational and business risks that could threaten long-term shareholder value. To the contrary, the Board of Directors believes the adoption of the reporting being proposed, in addition to creating unnecessary administrative costs, could expose Berkshire subsidiaries to competitive harm without commensurate benefit to our shareholders.
It's that last paragraph that is critical. Contrary to the claims of shareholder activists, political spending disclosure can harm companies in a variety of ways. Or so says the sage of Omaha.
