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Cisco Systems – Lobbying Reporting (2017)

Cisco Systems – Lobbying Reporting (2017)

Outcome: Pending

Whereas, we believe in full disclosure of our company’s direct and indirect lobbying activities and expenditures to assess whether Cisco’s lobbying is consistent with its expressed goals and in the best interests of shareholders.

Resolved, the shareholders of Cisco Systems, Inc. (“Cisco”) request the preparation of a report, updated annually, disclosing:

1. Company policy and procedures governing lobbying, both direct and indirect, and grassroots lobbying communications.

2. Payments by Cisco used for (a) direct or indirect lobbying or (b) grassroots lobbying communications, in each case including the amount of the payment and the recipient.

3. Cisco’s membership in and payments to any tax-exempt organization that writes and endorses model legislation.

4. Description of management’s decision making process and the Board’s oversight for making payments described in sections 2 and 3 above.

For purposes of this proposal, a “grassroots lobbying communication” is a communication directed to the general public that (a) refers to specific legislation or regulation, (b) reflects a view on the legislation or regulation and (c) encourages the recipient of the communication to take action with respect to the legislation or regulation. “Indirect lobbying” is lobbying engaged in by a trade association or other organization of which Cisco is a member.

Both “direct and indirect lobbying” and “grassroots lobbying communications” include efforts at the local, state and federal levels.

The report shall be presented to the Audit Committee or other relevant oversight committees and posted on Cisco’s website.

Supporting Statement

As shareholders, we encourage transparency and accountability in the use of corporate funds to influence legislation and regulation. Cisco spent $4.67 million in 2015 and 2016 on direct federal lobbying activities. This figure does not include expenditures to influence legislation in states, where Cisco also lobbies but disclosure is uneven or absent. For example, Cisco reportedly lobbies in 34 states (“Amid Federal Gridlock, Lobbying Rises in the States,” Center for Public Integrity, February 11, 2016). Cisco’s federal lobbying has attracted media scrutiny (“Here’s How Much Silicon Valley’s 6 Biggest Companies Spent on Lobbying in 2016,” Silicon Valley Business Journal, January 25, 2017), as has its international lobbying (“US Tech Groups Lobby Netherlands to Resist EU Tax Reforms, Finfacts, August 30, 2016).

Cisco lists its membership in the Chamber of Commerce, which has spent over $1.3 billion on lobbying since 1998. But Cisco fails to comprehensively disclose all of its major trade association memberships, such as its membership in the Business Roundtable, which spent $34.95 million on lobbying in 2015 and 2016. Nor does Cisco disclose its payments to trade associations or the amounts used for lobbying. Absent a system of accountability, company assets could be used for objectives contrary to Cisco’s long-term interests. For example, Cisco was recognized “Green Power Partner of the Year” by the EPA in 2016, yet the Chamber has sued the EPA to block the Clean Power Plan. We question if Cisco’s membership in the Chamber presents reputational risk on the issue of addressing climate change.

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