Aetna's Failure to Disclose Gifts to Tax-Exempt Groups
May Violate 2007 Shareholder Agreement
Investors Cite Lack of Compliance with Previous Agreement to Report on Company Contributions to Groups Opposing Health Care Reform
New York, NY/// July 11, 2012/// Today, long-term Aetna investors made public a letter they sent to management citing potential non-compliance with a standing agreement regarding transparency around political contributions and lobbying expenditures. The agreement was negotiated by Mercy Investment Services and other members of the Interfaith Center on Corporate Responsibility (ICCR) and served as the basis for the withdrawal of a resolution they had filed with the company in 2007 requesting comprehensive reporting of the company’s political spending.
At issue are the reported millions in undisclosed contributions to tax exempt groups such as America’s Health Insurance Plans (AHIP) which were then re-directed to the U.S. Chamber of Commerce to oppose the Affordable Care Act (ACA) legislation and elected officials who supported it.
“The resolution was withdrawn in good faith and on the basis of very specific commitments by the company,” said Sr. Valerie Heinonen, Director of Shareholder Advocacy for Mercy Investment Services who leads the initiative with the company. “Aetna’s initial report to investors was quite good and we had every reason to trust that the information they were providing was comprehensive. But press reports of undisclosed donations to organizations with obvious political agendas would be in violation of these agreements, and we are seeking an immediate response from management for clarification.”
ICCR Board member Donna Meyer said, “ICCR members, many of them representing U.S. health care systems, advocate for increasing the access and affordability of health care. While not perfect, we support implementation of ACA and are concerned with possible conflict of interest when companies that publicly endorse the legislation are found to be intensely lobbying to have it repealed.”
Said Tim Smith of Walden Asset Management,“This proxy season there were over 100 shareholder resolutions filed seeking disclosure regarding how companies spent company funds to advance either a political campaign or legislative agenda. Insurance companies in particular have been working to influence public policy. Many times such contributions advance legitimate shareholder interests but politically-oriented contributions can embroil the company in controversy and harm its reputation or business. For this reason, full and accurate disclosure and strong management oversight are a minimum expectation for good corporate governance.”
Laura Berry, Executive Director of the Interfaith Center on Corporate Responsibility said, “When a company agrees to report, the integrity of the disclosure should not require a “leap of faith,” but rather confidence in the corporate leaders involved. As shareholders, we expect companies to honor their commitments, particularly those negotiated in response to the withdrawal of publicly filed shareholder proposals. When companies do not honor those pledges, they dishonor the spirit of shareholder engagement.”
Said Heinonen, “We want to be clear that we are not questioning Aetna’s right to make these donations. But investors have rights as well, and understanding how company resources are being spent is one of them. Management should expect that we will hold them to their promise to report these donations both comprehensively and honestly.”
Director of Communications, ICCR
About the Interfaith Center on Corporate Responsibility (ICCR):
Currently celebrating its 41st year, ICCR is the pioneer coalition of active shareholders who view the management of their investments as a catalyst for change. Its 300 member organizations with over $100 billion in AUM have an enduring record of corporate engagement that has demonstrated influence on policies promoting justice and sustainability in the world.