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Bank of America Shareholders to Vote on Political Spending Resolution

For Immediate Release

On Wednesday, May 9th, shareholders at Bank of America will vote on a first-of-its-kind “refrain from political spending” resolution. The resolution would request that the board of directors impose a ban on the use of corporate treasury funds to influence the political process. This would include contributions to Super PACs, political non-profits, such as the American Legislative Exchange Council (ALEC) of which Bank of America is a known member, and trade associations, such as the Chamber of Commerce.

Resolutions addressing political spending are among the most popular in the 2012 shareholder season, many dealing with the disclosure of such spending.

“Given the public’s generally negative attitude toward B of A right now, it’s no wonder the shareholders are concerned about a potentially public political misstep,” said Pedro Morillas, CALPIRG legislative director. “Now that corporations can freely spend what they want on politics the owners of these companies, the shareholders, are asking a very logical question—Should they?”

This is the first shareholder season for this groundbreaking resolution which was introduced by socially responsible investment firms Trillium Asset Management at Bank of America and 3M Corporation and by Green Century Capital Management at Target Corporation.

In 2010, the Supreme Court ruled in Citizens United vs. the FEC that corporations have the right to contribute unlimited sums of money to influence an election, opening the floodgates for the type of corporate political spending which the “refrain” resolution seeks to address. Since that decision, outside spending in elections increased from $3.4 million in 2006 to $58.4 million in 2010 and from $25 million in 2008 to $121.1 million so far in 2012.

“Right now there is no way for shareholders to get a clear picture of their company’s political spending. And given the potential down sides of playing in politics, especially for B of A, calling for an end to this type of spending is a smart move,” added Morillas. 

Recent studies have shown that political spending can have a negative impact on a corporation’s bottom-line. An April 25 study from the University of Kansas and the University of Minnesota found a decline of 7.4 basis points in risk-adjusted stock return for every $10,000 in political donations and found a relationship between high political spending and poor corporate governance.

In addition, political contributions by Target Corporation and 3M became the subject of outrage and boycotts in 2010, leading to brand and reputation damage that many shareholder groups view as a threat to their investment.

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