Transparency and Board Oversight for Political Contributions – Southern Company
Resolved, that the shareholders of Southern (the “Company”) hereby request that the Company provide a report, updated semi-annually and at reasonable cost, disclosing the Company’s:
1. Policies and procedures for political contributions and expenditures (both direct and indirect)
made with corporate funds.
Monetary and non-monetary political contributions and expenditures not deductible under section 162 (e)(1)(B) of the Internal Revenue Code, including, but not limited to, contributions to or expenditures on behalf of political candidates, political parties, political committees, and other political entities organized and operating under 26 USC Sec. 527 of the Internal Revenue Code; and any portion of any dues or similar payments made to any tax exempt organization that is used for an expenditure or contribution, if made directly by the corporation, would not be deductible under section 162 (e)(1)(B) of the Internal Revenue Code. The report shall include the following:
This report shall be presented to the Board of Directors’ Audit Committee or other relevant oversight Committee, and posted on the Company’s website to reduce costs to shareholders.
Supporting Statement: As long-term shareholders of Southern, we support policies that apply transparency and accountability to corporate spending on political activities. Such disclosure is consistent with public policy and in the best interest of our Company’s shareholders.
Company executives exercise wide discretion over the use of corporate resources for political activities. These decisions involve political contributions (“soft money”) and payments to trade associations and related groups used for political activities that media accounts call the “new soft money.” The Bi-Partisan Campaign Reform Act of 2002 allows companies to contribute to independent political committees, also known as 527s, and to give to tax-exempt organizations that make political expenditures and contributions. Most of these expenditures are not disclosed; for example, Southern Company's payments to trade associations used for political activities are undisclosed and unknown.
Underscoring the need for self-disclosure, two Southern Company subsidiaries' 2003-2004 PAC contributions were misreported by their recipients and subsequently by the Federal Elections Commission. The proposal asks the Company to disclose its political contributions and payments to tax exempt organizations, including trade associations.
Absent a system of accountability, corporate executives will be free to use company assets for political objectives that are not shared by, and may be inimical to the interests of, the Company and its shareholders. Relying on publicly available data does not provide a complete picture of the Company’s political expenditures. The Company’s Board and its shareholders need complete disclosure to be able to fully evaluate the political use of corporate assets. That is why we urge your support for this critical governance reform.