Excerpts of Sample Policies on Political Expenditures

Listen to article
The following is a sidebar that appeared in the Directors & Boards First Quarter 2022 feature, "10 Principles for Board Engagement."


State Street – 2021 Policy




State Street’s CEO is empowered to make political contributions. The company supports many lobbying organizations but asks them not to get involved in political campaigns. 




The laws of many countries, including the United States, set strict limits on political contributions made by corporations. In accordance with our Standard of Conduct, only the Chief Executive Officer may authorize the use of corporate resources in connection with political activities.




State Street participates in and pays membership dues to a number of industry trade organizations. Participation in these organizations is important to gain industry insight, foster relationships and professional opportunities within the business and to collaborate on topics of mutual interest. We request that each of our principal trade organizations refrain from using our membership dues: for contributions to U.S. federal campaigns, state or local candidate campaigns, political party committees or political committees (including PACs and independent expenditure committees); to influence directly or indirectly the election of a federal, state or local candidate; or for contributions to any other political organization exempt from U.S. federal income taxes, such as organizations organized and operated under IRS Code Section 527. 
















State Street has a PAC that contributes to candidates, but with certain restrictions. Following the events of January 6, 2021, State Street issued a statement that said its PAC “will not contribute to lawmakers who supported … efforts to undermine our democracy” and that the company “will establish a process to evaluate contributions prospectively to ensure we are not supporting any candidate whom we believe [is] subverting the core democratic principles of our Constitution, especially election outcomes.”






Council of Institutional Investors




The Council of Institutional Investors has included political contributions in its most recent Corporate Governance Policies.






Charitable and Political Contributions




2.14a Board Monitoring, Assessment and Approval: The board of directors should monitor, assess and approve all charitable and political contributions (including trade association contributions) made by the company. The board should only approve contributions that are consistent with the interests of the company and its shareowners. The terms and conditions of such contributions should be clearly defined and approved by the board.




2.14b Disclosure: The board should develop and disclose publicly its guidelines for approving charitable and political contributions. The board should disclose on an annual basis the amounts and recipients of all monetary and non-monetary contributions made by the company during the prior fiscal year. Any expenditures earmarked for political or charitable activities that were provided to or through a third-party should be included in the report.




Sample CEO Statements on Social Issues 




CEO stances on social issues ebb and flow with headlines. They do not usually evoke governance principles but rather go straight to the social issues themselves. In his 2022 “Letter to CEOs,” Blackrock CEO Larry Fink writes that stakeholders don’t want their CEOs to “opine on every issue of the day, but they do need to know where we stand on the societal issues intrinsic to our companies’ long-term success.” Here are examples from recent years. 




May 2017 and December 2019 – Joint CEO Statements on the Paris Accord:




“We believe that American companies … and our suppliers, customers, and communities… will benefit from U.S. participation in the Paris Agreement.” 




— Letter to President Donald J. Trump from 30 CEOs, May 10, 2017




“The promise of the Paris Agreement is one of a just and prosperous world. We urge the United States to join us in staying in.” 




— Joint Labor Union and CEO Statement on the Paris Agreement, 




December 2, 2019 




May 2020 – Individual CEO Statement on Racism:  




“To overcome the challenges that we all face, we must use our voices and demand that ignorance and racism must come to an end. This is a time to come together, to support one another and, through partnership, begin to heal.” 




— Marvin Ellison, Lowe’s Cos., May 31, 2020




April 2021 – Joint CEO Statements on Voting Access






“We call on elected leaders in every state capitol and in Congress to work across the aisle and ensure that every eligible American has the freedom to easily cast their ballot and participate fully in our democracy.” 




— Civic Alliance, representing 100 CEOs, April 2, 2021 




“We all should feel a responsibility to defend the right to vote and to oppose any discriminatory legislation or measures that restrict or prevent any eligible voter from having an equal and fair opportunity to cast a ballot.” 




— Black Economic Alliance, representing 500 signatories including dozens of CEOs from major corporations, April 14, 2021




“The right to vote is a priority for Patagonia because it creates the foundation for progress on everything we care about. Thriving communities and the fate of our planet rely on electing leaders who share our sense of urgency. And that relies on every eligible voter having equal access to the ballot… I am calling on the business community to join us in urging the Senate to pass the Freedom to Vote: John R. Lewis Act. This federal bill will help ensure election integrity and that you and your neighbor have equitable access to the ballot box. 




“The fate of our democracy, and ultimately, the planet is at stake. “


— Ryan Gilbert, CEO, Patagonia, January 18, 2022






Board Oversight of CEO Activism 




In recent articles on board oversight of CEO activism and corporate political spending, attorney and board advisor Holly Gregory has described how boards can recommend a series of steps for ensuring proper board oversight of CEO statements on social issues. The following steps are adapted from her articles:  
















Step 1. Determine board involvement. The CEO and board should first consider how the board (or a designated board committee or director) will be involved in the choice of issues to be articulated by the CEO and how the board will be kept informed of these issues. 
































Step 2. Select and assess the issues. Whatever protocol is established, the board should help to select issues for a potential company response. The board should not only identify these in response to current events but also select these proactively, planning rather than reacting. The issues should match with the company’s interests and core values and be selected with consideration of risks and benefits.
































Step 3. Oversee response team. Next the board should oversee the formation of a response team and protocol. The team can help to determine whether or not any given issue is important to the company and articulate why the company is or is not taking a stance. The team can help to prepare the company’s response to emerging issues; seek broad consensus internally to support the company’s stance; address questions from key constituents about the company’s reasoning; and assess and manage the impact once a position is taken, including procedures for managing negative reactions from employees, customers, suppliers and the media.
































































































































Alexandra "Alex" Reed Lajoux retired from the National Association of Corporate Directors as chief knowledge officer emeritus in 2016 after 30 years there. From 1978 to 1981, she served as editor of Directors & Boards, which was founded by her father, Stanley Foster Reed, in 1976.

Other related articles

  • Behind the Record Number of Say-on-Pay Failures in 2022

    Published March 22, 2023
    By Bill Hayes

    Investors are showing no hesitancy to object to nonpreferred pay decisions and program features.

  • The Ups and Downs of C-Suite Compensation

    Published March 16, 2023
    By Bill Hayes

    A new report finds CEO and CFO base salaries increasing but bonuses on the decline.

  • What Directors Are Thinking

    Published March 14, 2023
    By Charles Zimmerman, DMin

    What Directors are Thinking

    Charles Zimmerman, DMin

    Independent Director: 
    Univest, Clemens Family Corporation

  • Don’t Drop the Baton: Talk More About CEO Succession Planning

    Published March 09, 2023
    By Naveen Bhateja

    With more than half of companies failing to plan for CEO succession, the topic needs to become more prevalent at meetings.

    In a relay race, dropping the baton is catastrophic. All the advantages and momentum gained up to that point in the race are lost. Even the most talented teams have a slim chance of recovering from a dropped baton.