Lifting the Curtain on Corporate Contributions

During the first six months of 2007, Pfizer spent $128,969 from its corporate checkbook on political donations to Democratic and Republican politicians. It doled out another $614,300 to various party committees and lobbying organizations, including $50,000 to PhRMA, the pharmaceutical lobbying powerhouse.

As a shareholder, do you care? Should you care?

The Center for Political Accountability thinks you should. The non-profit, non-partisan organization works with institutional investors to push companies to disclose more about how they spend their corporate money on politics. Pfizer is one of 33 companies that have agreed to the disclosure since the group started calling for more transparency four years ago.

Another 53 companies put the resolution to shareholder vote on their proxies this year. Unfortunately, only one company (Unisys) received a majority of votes in favor of it.

But the C.P.A. has high hopes that change is afoot. One reason: the mutual fund titan Fidelity began abstaining this year from voting on shareholder resolutions that call for more disclosure on political giving. Last year, funds such as Fidelity Contrafund and Fidelity Magellan Fund voted with management on such resolutions, which usually comes down against it.

By abstaining, says the center's executive director Bruce Freed, mutual fund managers give more weight to the shareholder votes in favor of it. Winning a majority of votes in favor isn't necessarily the goal. It's winning enough to make the management listen.

"Our measure of success is the number of companies that withdraw the shareholder resolution because they approve it," Freed says. "The key is to engage them in a dialogue and get them to adopt it. When the votes in favor get to be in the 20 or 30 percent range, they begin to reconsider."

When it comes to campaign financing and lobbying, the more disclosure the better. And if companies use corporate money to pay for it, shareholders have a right to now what they are investing in.

But investors may find that reading the disclosures will only raise more questions in their minds, for the few who bother to check.

For instance, Pfizer gave $20,000 to the Democratic State Central Committee of California and $5,000 to the Republican Party of Iowa Building Fund.

Why? Only time will tell.

by Megan Barnett