Shareholders are pushing Citigroup Inc. and several other banking companies this proxy season to fully disclose their political contributions.
At shareholder meetings this spring large banking companies will also face challenges to board election processes and lending practices. But some proposals, including some related to the environment and compensation, may not make it to a shareholder vote this year, because the companies are fighting them.
Roughly 50 companies from various industries, including AmSouth Bancorp of Birmingham, Ala., and Washington Mutual Inc. of Seattle, are being asked to disclose how they spend shareholders' money in the political arena.
Shareholders have been pushing the issue for several years, said Tim Smith, the president of the Social Investment Forum, a Washington trade group for the social investment industry. But this year "there's new energy focusing on it, post the Abramoff scandal," he said, referring to Republican lobbyist Jack Abramoff, who used Washington connections to benefit corporate clients.
The proposals ask the companies to produce semiannual reports disclosing the value of political contributions, the recipients, and the company's policies and procedures for direct and indirect political contributions.
Citigroup, Wamu and AmSouth all said they oppose further disclosure of political contributions and argue that information about their contributions and those of employees is available in public records.
Citi gave $100,000 to a pro-business lobbying group in California and co-hosted a fund-raiser for ballot initiatives in 2005 pushed by Gov. Arnold Schwarzenegger. Those facts are available in the records of the California secretary of state.
"Public disclosure of the specific business rationale for each political donation could place Citigroup at a competitive disadvantage by revealing its strategies and priorities," the company wrote in its comment on the proposal.
Amsouth and Wamu are also recommending that shareholders reject the proposal.
Two years ago the Center for Political Accountability in Washington, which is spearheading the shareholder campaign this year, praised another financial company, Morgan Stanley, as the first major U.S. company to agree to disclose soft-money contributions.
Lending practices are - as usual - on the front burner for banking companies' shareholders.
JPMorgan Chase & Co. and Bank of America Corp. received shareholder proposals seeking to bar them from selling first mortgages more than four times the borrower's gross income. However, the Securities and Exchange Commission granted both companies' requests to exclude the proposals from the proxy statements on the ground that they related to ordinary business operations.
However, the SEC did not side with Wells Fargo & Co. against a proposal requesting a study of racial and ethnic disparities in its mortgage loan pricing. The proposal asks that the report be prepared on the basis of Home Mortgage Disclosure Act data.
The SEC's division of corporation finance ruled that information on the San Francisco company's web site on HMDA data does not make the shareholder proposal redundant.
"What we're terribly concerned about is racial disparities in mortgage lending," said Julie N.W. Goodridge, the president of NorthStar Asset Management Inc. of Boston, a sponsor of the proposal. She said the proposal arose from data showing African-Americans are three times more likely than white borrowers to receive high-cost mortgages from Wells Fargo.
Wells Fargo declined to comment on the proposal.
Wachovia Corp. and Wells Fargo received proposals seeking reports on how global climate change is affecting business strategy. The SEC said the proposals could be excluded because they pertained to ordinary business.
Bank of New York Co., Wells Fargo, and Merrill Lynch & Co. Inc. received proposals challenging compensation practices. The Catholic Equity Fund is asking that shareholders get a chance each year to block compensation for nonemployee directors. The proposal contends that such a policy would hold directors accountable for excessive pay packages they grant to chief executives.
Wells Fargo challenged the compensation proposal with the SEC, but it lost. A spokesman for the Catholic Equity Fund said that he expects it to be on the proxy at Wells and Merrill but that he was unsure about Bank of New York.
Bank of New York declined to comment.
