Money has always been an unseemly part of politics, and the Supreme Court’s 2010 decision in Citizen’s United v. Federal Election Commission opened the floodgates to corporate political spending. The Citizen’s United decision allows corporations and unions to make unlimited political expenditures. Leaving aside the way in which money can distort our democracy, Citizen’s United has also made it more possible for corporations to misuse their funds.
Corporations’ decisions to give money to political candidates and causes are made in accordance with the same rules as ordinary business decisions – meaning that, generally speaking, directors and executives have plenary authority. This scenario is ripe for abuse. For example, if the CEO of a corporation were planning to run for office in the near future, that CEO could influence the board to make numerous political contributions that would grease the way for the CEO’s upcoming campaign. (Many powerful executives have transitioned directly into politics, including former Vice President Dick Cheney and former New Jersey Governor Jon Corzine. Even before Citizen’s United, these transitions raised serious concerns. Vice President Cheney received a $25 million golden parachute from the company where he was CEO, and this company subsequently received billions of dollars in no-bid government contracts after he was elected Vice President. Governor Corzine recently spearheaded the MF Global financial disaster, which cost investors billions of dollars and again raised questions about the interplay of money and politics). Or, if a majority of the board had a unique ideological viewpoint, they could spend the corporation’s money in such a way as to further their own political viewpoint – even though supporting that viewpoint might negatively affect the corporation’s employees and bottom line. In theory, a corporation could spend 80% of its revenue on political speech. Investments like those described above would be against the interests of the shareholders and employees. Although corporations have wide latitude to engage in political speech, there may be scenarios where the political spending is so contrary to the shareholders’ or employees’ interests that the spending is unlawful.
If you are a shareholder or corporate employee, and you believe a corporation is spending money on political activities in a way that is dramatically contrary to the corporation’s interests, please contact us to discuss your legal rights.