Corporate boards approve an annual budget, which includes lobbying fees and political strategy. Board members donate money, time and expertise to further the firm's interest. For that, they are paid handsomely. Not terribly long ago, Senators wouldn't accept donations from corporations. They considered it a conflict of interest, as they were making decisions involving those very firms.
President Dwight Eisenhower warned of the Military-Industrial Complex. Today's steroid fueled version, encompasses much more than the armed forces. The Government-Industrial Monstrosity (GIM) infects nearly every sector of the U.S. While it is the elephant in the room, it badly wishes to remain invisible. Consider the case of Union Pacific, the huge railroad and shipping company. Large shareholders proposed greater political disclosure in April 2009:
As long-term shareholders of Union Pacific, we support transparency and accountability in corporate spending on political activities. These activities include direct and indirect political contributions to candidates, political parties or political organizations; independent expenditures; or electioneering communications on behalf of a federal, state or local candidate.
Disclosure is consistent with public policy, in the best interest of the company and its shareholders and critical for compliance with recent federal ethics legislation. Absent a system of accountability, company assets can be used for policy objectives that may be inimical to the long-term interests of and may pose risks to the company and its shareholders.
Union Pacific contributed at least $3.2 million in corporate funds since the 2002 election cycle.
However, relying on publicly available data does not provide a complete picture of the Company’s political expenditures. For example, the Company’s payments to trade associations used for political activities are undisclosed and unknown. In many cases, even management does not know how trade associations use their company’s money politically. The proposal asks the Company to disclose all of its political contributions, including payments to trade associations and other tax exempt organizations. This would bring our Company in line with a growing number of leading companies, including Pfizer, Aetna and American Electric Power that support political disclosure and accountability and present this information on their websites.
The Company’s Board and its shareholders need complete disclosure to be able to fully evaluate the political use of corporate assets. Thus, we urge your support for this critical governance reform.
How did the company respond?
The Board of Directors recommends a vote AGAINST this proposal.
Union Pacific spent $43.5 million on lobbying from 2003-2009. It reached a maximum of $9.8 million in 2006, the same year it added two politically high powered board members. July 2006 found Andy Card, President George W. Bush's Chief of Staff, with a seat at the table. One story stated:
Union Pacific elected former White House Chief of Staff Andrew Card to its board of directors, a move that added clout to the railroad's already impressive Washington connections but dismayed shippers who feel besieged by UP's market power.
After the midterm elections (when Democrats gained control of the House of Representatives), Union Pacific added Thomas F. "Mac" McLarty to the board ranks. McLarty was President Bill Clinton's Chief of Staff and is a Senior Adviser for The Carlyle Group.
Union Pacific created new board seats for Card and McLarty. Here's their 2008 board compensation:
They both control approximately 7,500 shares of stock. At $61 per share, that equates to over $450,000. Sweet! Three years of board pay and their stock holdings amount to $1 million, a windfall for most people, but chump change for the ex-President's Chiefs of Staff.
What was Union Pacific supporting the last six years that required bringing political insiders onto the board and paying tens of millions in lobbying fees? Did it want to set the stage for Mexico bypassing Western U.S. ports? Was it trying to outsource work to Mexico?
Their company description includes:
Union Pacific connects with Canada's rail systems and is the only railroad serving all six major gateways to Mexico, making it North America's premier rail franchise.The big money boys hate a level playing field, using Uncle Sam to tilt it in their favor at every turn. Transparency and accountability? Hardly. Think of the windfall awaiting Rahm Emanuel.