NorthStar Asset Management issued a rebuttal to Facebook’s guidance in its Schedule 14A filing with the Securities and Exchange Commission detailing measures up for vote at its annual meeting, saying in a Form Px14a6g filing with the SEC that shareholders should vote for the resolution involving political contributions, and not against it, as the company advised.
The shareholder proposal — which will be voted on at the annual meeting set for Thursday, May 22, at 11 a.m. PT, at the Sofitel San Francisco Bay in Redwood City, Calif. — suggests that Facebook’s board of directors create and implement a policy of corporate values regarding electioneering contribution decisions by the company and fbPAC and requiring reports to shareholders on contributions that fall outside that policy.
Facebook said in its recommendation advising shareholders to vote against the measure, from its Schedule 14A:
In response to the stockholder proposal related to political contributions, we believe it is our responsibility to engage in political, legislative, and regulatory processes to advance laws and policies that are in the best interests of our company, our stockholders, the people who use our services, and our partners. As one of the world’s largest technology companies, our continued success and long-term profitability is dependent on the legal, regulatory, and public policy decisions that affect our business. We recognize the importance of our involvement in petitioning government with respect to topics that are relevant to our business and believe that such involvement is proper and necessary.
We have practices in place to ensure the appropriate disclosure and oversight of our lobbying and political activities. Our lobbying and political activities are conducted with the oversight of our vice president of public policy (Elliot Schrage), who works with senior management to ensure that our activities are consistent with our public policy objectives. In addition, our lobbying and political activities are subject to applicable laws, including those that require us to disclose our lobbying and political activities. We are committed to compliance with these laws. For example, information about the contributions of the Facebook PAC (political action committee) is available through the Federal Election Commission at http://docquery.fec.gov/cgi-bin/fecimg/?C00502906, and disclosures filed under the Lobbying Disclosure Act are available at http://disclosures.house.gov/ld/ldsearch.aspx.
We also work with a number of industry and trade groups. While in many instances our work is ongoing, often our participation in these groups is limited to a single issue or set of issues, specific to a particular legislative body, and takes place over a short period of time. We believe it is in the best interests of the company to work with such groups because of the general business, technical, and industry standard-setting expertise provided by these organizations. These groups also provide a forum to discuss important issues faced by technology companies and are often helpful for the purpose of building a consensus amongst organizations with similar interests and advocating in favor of those interests.
This proposal seeks to impose requirements on us that would be cumbersome to apply, are not required by law, and are not standard amongst other companies, including our competitors. If we comply with the requirements of this proposal, it could put our company at a relative disadvantage to our competitors and result in an unnecessary use of company resources.
It is our belief that our current lobbying and political activities are a necessary and important part of our efforts to achieve long-term success, and that additional reporting with respect to those activities is not necessary and would not be beneficial to our stockholders. Therefore, our board of directors recommends that our stockholders vote against this proposal.
NorthStar said in its rebuttal (highlights), filed by President and CEO Julie Goodridge:
Facebook has no public political contributions policy.
Unlike most public corporations, including technology company competitors Apple, IBM, and Google, Facebook has no public political contributions policy (as far as the proponent could find through Web searching). A comprehensive political contributions policy is crucial for good corporate governance, and provides shareholders with appropriate and reasonable disclosure of company practices. The proponent is concerned that without a public political contributions policy, shareholders are in the dark.
Facebook has made political contributions that support politicians whose voting records directly contrast the company’s stated public policy priorities, and may undermine the company’s business model.
In reference to SOPA and PIPA (the Stop Online Piracy Act and Protect Internet Property Act, legislation which opponents claim threatened free speech and innovation), Facebook’s CEO (Mark Zuckerberg) has stated that the company “will continue to oppose any laws that will hurt the Internet” and that they support politicians who seek to further “open and free Internet,” yet the company PAC has contributed to numerous politicians opposing the company view, and the Facebook PAC contributed to three sponsors of SOPA as recently as last fall (September through December 2013).
The Proponent believes that Facebook has a young, progressive consumer which supports lesbian, gay, bisexual, and transgender (LGBT) rights, as does Facebook’s stated company values, yet fbPAC has donated 41 percent of contributions since its inception to politicians voting against LGBT rights.
Nearly one in three of fbPAC contributions have gone to politicians voting to deregulate greenhouse gases and voting against H.R. 2454, the American Clean Energy and Security Act of 2009, despite Facebook’s public support for the environment such as its Open Compute Project, its 2012 announcement that Facebook was “going green” (facebook.com/green), and Facebook’s membership in the Digital Energy Solutions Campaign (a group that works on public policy and setting standards for energy efficiency).
The proponent feels that consequences of unintended incongruent contributions include alienation of customer base, alienation of advertisers, harm to company name, and potential harm to shareholder value.
Facebook’s opposition statement says that “our continued success and long-term profitability is dependent on the legal, regulatory, and public policy decisions that affect our business,” yet the proponent believes that company’s contributions directly undermine the company’s business interests and public policy stances, thus putting shareholder value at risk.
The proponent believes that this proposal is in the best interest of the company — that it is protective of shareholder value without being overly proscriptive or burdensome. The proponent also believes that, contrary to company claims, Facebook’s existing procedures regarding political contributions are not sufficient.
We urge you to vote “for” proxy item No. 5. Should you have any proposal-specific questions, please feel free to contact us at firstname.lastname@example.org.
Readers: If you were eligible to vote on this item, how would you vote?
Image courtesy of Shutterstock.