DiNapoli: PepsiCo to disclose lobbying and trade association tiesby jmaloni
Thirteenth agreement reached on political spending disclosure since 2010
PepsiCo, a global food and beverage company with annual revenues of $60 billion, has agreed to fully disclose all of its direct lobbying and contributions made to trade associations as well as funds paid to grassroots lobbying and tax-exempt organizations that write and endorse model legislation, according to New York State Comptroller Thomas P. DiNapoli. In response to the agreement, DiNapoli withdrew a shareholder resolution calling for disclosure of shareholder money spent on lobbying and other political spending.
"PepsiCo has taken an important step in giving shareholders a clear view of the way it uses corporate dollars in the political arena," DiNapoli said. "Shareholder value is enhanced and reputational risks are reduced when companies disclose how corporate money is being spent in politics. Companies should follow PepsiCo's lead by embracing transparency."
The agreement among DiNapoli, PepsiCo and Walden Asset Management specifies that the company will disclose the following on its website before its 2013 annual shareholder meeting this spring:
- Direct lobbying: A list of all federal and state lobbyists with which the company directly contracts.
- Trade associations: A list of all U.S. trade associations that lobby on behalf of PepsiCo at the federal and state levels, which the company contributes more than $25,000 annually.
- Grassroots: Any direct grassroots efforts or payments to independent organizations to which it provides funding.
- Tax-exempt organizations that write and endorse model legislation: The company is not a member of any such organization, but will provide disclosure if that changes.
- Revamp website: PepsiCo will also, by the fourth quarter of 2013, review and revamp its website on political contributions, lobbying and disclosure and will further clarify how it interacts with trade associations.
Tim Smith, senior vice president and director of ESG shareowner engagement at Walden Asset Management, said, "We were pleased that the dialogue with PepsiCo management resulted in an agreement to provide information on the company's lobbying to impact public policy, both directly and through third parties like trade associations. We believe it is critical for companies with a commitment to acting responsibly to insure that their trade associations do not take their dues payments and use them to undercut their own values and stated commitments."
DiNapoli has taken a comprehensive approach to engaging with portfolio companies held by the New York State Common Retirement Fund (the fund) to compel disclosure of political spending. In 2010, the fund, along with other members of the Council of Institutional Investors, sent letters to 430 S&P 500 companies asking them to disclose contributions made with corporate funds.
In 2011 and 2012, the fund filed 27 shareholder resolutions seeking disclosure of political spending, reaching agreement with 10 companies. To date, DiNapoli has filed 26 resolutions for 2013 on the issue of political spending disclosure and has reached agreement with several companies, including KeyCorp.
Last year, the comptroller wrote to the Securities and Exchange Commission in support of a petition - which the commission has indicated it will take up in 2013 - for rulemaking regarding disclosure of political expenditures. In mid-February, the Fund jointly announced that it settled a lawsuit against Qualcomm Inc. The suit sought to compel the company to reveal how shareholder funds were being spent for political purposes. As a result of that settlement, Qualcomm revealed previous political spending and agreed to disclose future use of corporate funds for political purposes.
As of March 8, the fund owned 5,177,498 shares of PepsiCo valued at approximately $399.7 million.