Report Board Oversight of Material Issues Related to Climate Change

Resolution Text

RESOLVED: The shareholders request that the board (at reasonable cost, within a reasonable time, and excluding confidential/proprietary information) commission, oversee, and publish an independent third-party study which examines the impact on the company, the sector, and American democracy of the company adopting a policy prohibiting the use of corporate or PAC funds for direct or indirect contributions to political candidates. The study should provide recommendations and potential next steps.

WHEREAS: Former chief justice of the Delaware Supreme Court Leo Strine argued in the Harvard Business Review: “Because political donations are controlled by managers, and because no corporate stakeholders, including shareholders, base their relationship with a company on the expectation that it will use its entrusted capital for political purposes, corporate political spending cannot reflect the diverse preferences and views of those stakeholders. Even the classic justification that corporate donations maximize shareholder wealth is on shaky ground: Emerging evidence suggests that they can destroy value by suppressing innovation and distracting managers from more-pressing tasks.” https://hbr.org/2022/01/corporate-political-spending-is-bad-business

For example, a study of corporate political activity in the form of lobbying and PAC spending by S&P 500 companies from 1998 to 2004 found that it was strongly and negatively related to company value. This suggests that ceasing political spending does not necessarily put a company at a competitive disadvantage.
https://dash.harvard.edu/bitstream/handle/1/30064396/Coates_684.pdf?sequence=1&isAllowed=y
Furthermore, political contributions by one company can take the form of rent-seeking which may lead to externalities that weigh on other companies, taxpayers, and consumers – possibly slowing real overall economic growth. This may raise concerns for widely diversified investors who are more exposed to the prosperity of the broader economy and suggests that they should support a cessation of political contributions.

Increasingly, companies such as IBM, Nvidia, ADP, Boeing, Verisign, and fifteen others are adopting policies prohibiting contributions of political funds directly or indirectly to influence elections. And another 72 companies prohibited or restricted payments to either trade associations or 501(c)(4)s.
https://www.politicalaccountability.net/wp-content/uploads/2023/10/2023-CPA-Zicklin-Index.pdf
We believe Verizon has reputational risk as it has repeatedly been called out for political contributions which appear to be inconsistent with its corporate values. As was pointed out in 2022, Verizon recognized Women’s History Month by highlighting how “Verizon ‘focus[es] on breaking down bias and stereotypes while continuing progress on women’s equality and gender equality.’” But between 2016 and May 2022, Verizon reportedly contributed $901,150 to anti-abortion political committees. https://popular.info/p/these-13-corporations-have-spent

Verizon claims it is “proud to foster an inclusive environment” and that it is “committed to LGBTQ+ equality across the board.” From January 2022 through May 2023 Verizon reportedly contributed $385,000 to anti-LGBTQ politicians. https://popular.info/p/these-25-major-corporations-donated
We believe that business needs a healthy democracy, yet it appears that “Verizon has donated $123,000 to 54 different GOP election deniers.” https://gizmodo.com/amazon-election-deniers-2020-midterms-pacs-1849706425

Given potential risks and potential negative impact on shareholder or portfolio value, the proponents believe Verizon should study a policy to refrain from using corporate treasury funds in the political process.

Resolution Text

RESOLVED, shareholders of Verizon request the preparation of a report, updated annually, disclosing:

Company policy and procedures governing lobbying, both direct and indirect, and grassroots lobbying communications.
Payments by Verizon used for (a) direct or indirect lobbying or (b) grassroots lobbying communications, in each case including the amount of the payment and the recipient.
Verizon’s membership in and payments to any tax-exempt organization that writes and endorses model legislation.
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 Verizon 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 Corporate Governance and Policy Committee and posted on Verizon’s website.

SUPPORTING STATEMENT

Full disclosure of Verizon’s lobbying activities and expenditures is needed to assess whether Verizon’s lobbying is consistent with its expressed goals and shareholder interests. Verizon spent $166,939,249 from 2010 – 2022 on federal lobbying. This does not include state lobbying expenditures, where Verizon also lobbies extensively, for example spending $12 million on lobbying in California from 2010 – 2022. And Verizon lobbies abroad, spending between €400,000 – 499,999 on lobbying in Europe for 2022.

Companies can give unlimited amounts to third party groups that spend millions on lobbying and undisclosed grassroots activity.1 Verizon fails to disclose its payments to trade associations and social welfare groups (SWGs), or the amounts used for lobbying, to shareholders. Verizon belongs to the Business Roundtable, CTIA – the Wireless Association, National Association of Manufacturers (NAM) and USTelecom – the Broadband Association, which together spent $47,460,000 on federal lobbying in 2022, and supports SWGs that lobby like Americans for Tax Reform and the RATE Coalition.

Verizon’s lack of disclosure presents reputational risks when its lobbying contradicts company public positions. For example, Verizon publicly supports addressing climate change, yet the BRT lobbied against the Inflation Reduction Act2 and NAM leverages its “influence to obstruct climate policy progress in the U.S. at the federal, state and local levels.”3 As Verizon has drawn scrutiny for paying single digits in federal taxes for 2018 – 2022,4 the RATE Coalition lobbied against raising taxes to pay for health care, education and safety net programs.5 And while Verizon no longer belongs to the controversial American Legislative Exchange Council,6 it was still represented by NAM, which previously sat on its Private Enterprise Advisory Council.7

Verizon should expand its lobbying disclosure.

1 https://theintercept.com/2019/08/06/business-group-spending-on-lobbying-in-washington-is-at-least-double-whats-publicly-reported/. 

2 https://www.theguardian.com/environment/2022/aug/19/top-us-business-lobby-group-climate-action-business-roundtable. 

3 https://www.greenbiz.com/article/dont-play-both-sides-take-3-steps-now-fix-your-trade-group-gap. 

4 https://itep.org/corporations-reap-billions-in-tax-breaks-under-bonus-depreciation/. 

5 https://www.washingtonpost.com/us-policy/2021/08/31/business-lobbying-democrats-reconciliation/. 

6 https://www.motherjones.com/politics/2018/09/verizon-quits-alec-david-horowitz/. 

7 https://www.exposedbycmd.org/2023/02/03/alec-expands-private-board-of-directors-with-woke-capitalism-fighters/.