It was. And from Axelrod’s perspective, it was good enough. It was generating ugly headlines against the chamber, and keeping focus off the miserable Obama economy and track record. And the strategy was proving far more fruitful in other contexts.
* * *
One of these was the Minnesota governor’s race. It was a made-to-order example of the financial pain and headache the left could inflict on any company that it knew was engaged in politics and then targeted. It explained why the chamber immediately dismissed Axelrod’s suggestion that it list its corporate donors. The trade association had only just witnessed what liberals like Axelrod had done to Target Corp.
Target, the retail giant, is based in Minneapolis. It opened its first store in the state in 1962. Unsurprisingly, it has an abiding interest in a positive state business environment. In 2010 it saw an opportunity to further that via Republican gubernatorial candidate Tom Emmer. Emmer, who’d served in the Minnesota House of Representatives, was running on lower business taxes and more jobs. That sounded good to Target, which in July 2010 gave $150,000 to an organization called Minnesota Forward—created by the Minnesota Chamber of Commerce and the Minnesota Business Partnership—which was running ads for Emmer.
The left tried to suggest that the Target donation was an example of the evil forces Citizens United had unleashed. It was a silly claim. None of this was secret; Minnesota Forward disclosed the contribution under state law. And none of it was new or outrageous. Target had a history of giving in state and local races. Its own political action committee, TargetCitizens, tended to spread donations evenly between federal Republicans and Democrats. And Target pointed out that its support for causes and candidates was always laser-focused on its “retail and business objectives,” which included “economic growth and job creation.”
Target’s donation was clearly aimed at electing a governor with free-market priorities that would benefit consumers, workers, and retailers. But left-wing activists didn’t care about this truth; they wanted to make Target an example. They combed through Emmer’s record, looking for a politically sensitive issue, and landed on the candidate’s opposition to gay marriage. At the time, Emmer wasn’t out of the mainstream in that position. In 2008, the majority of Americans still opposed gay marriage, as did, for the record, Barack Obama.
But it’s all in how you phrase it. In the activists’ hands, being pro–traditional marriage was but a short hop and skip to being actively “antigay”—which Target now stood accused of, by virtue of its support of Emmer. MoveOn.org immediately organized a national boycott of the store, crafting a petition on its website. It was at least honest about its goals. It called on signers to agree, “I won’t shop at Target until it stops spending money on elections. Companies like Target should stay out of elections, period.” The left leveraged social media platforms to turn the boycott into a nationwide cause. Facebook buzzed with fan pages such as “Boycott Target Until They Cease Funding Anti-Gay Politics.” YouTube videos featured former Target shoppers professing outrage. One, showcasing a mother telling her story of how she returned more than $200 of Target goods in solidarity with her gay son, went viral. “I’m going to boycott Target until they make this right,” she declared. Best Buy, which had also given money to Minnesota Forward, came in for the same treatment.
And what did Target need to make right? That was the joke. The Human Rights Campaign, an organization that supports gay rights, maintains what it calls its Corporate Equality Index, which annually ranks companies on its gay-rights policies. Target in 2009 and 2010 boasted a 100 percent score. The company was already offering domestic partnership benefits for employees. It had sponsored gay pride events around the state.
Yet Target couldn’t withstand the assault. By August it had formally apologized for giving money to benefit Emmer. CEO Gregg Steinhafel meekly announced that the company would revise its entire policy on political donations. One major change: Target would henceforth require any trade association to which it gave money to refrain from using those dollars for campaign activities. This was exactly what the left had hoped for; it was a stunning victory. And it had won it, by the way, with a Minnesota disclosure law that had required Minnesota Forward to divulge Target’s donation. Democrats were soon pushing that law as a model for the nation.
* * *
The left’s decision to focus on Emmer’s position on gay marriage was calculated and deliberate. It was part of a strategy that would later be disclosed by a man named Eric Burns. Burns had in a prior life been a staffer to Chuck Schumer, the New York senator who warned that his DISCLOSE Act was designed to make companies “think twice” about voicing an opinion. Burns became president of Media Matters, a Soros-funded outfit founded by liberal activist David Brock. It’s a heavyweight in the left-wing universe, and in 2010 Burns and Brock released a strategy memo for a coalition of liberals, much of which was focused on their new tool, “disclosure.” The goal, said the memo, was to root out the names of corporate donors, which the left would use to “create a multitude of public relations challenges for corporations that make the decision to meddle in politics. Working with allied organizations we will utilize the database’s information to provoke backlashes against companies, shareholders, employees and customers, and the public at large.” The memo explained that the coalition would use anything and everything to tar a business; it would not draw distinctions. “When businesses back candidates, Media Matters Action Network will portray it as a complete endorsement of everything that given politician has said or done.” (Media Matters Action Network is a 501(c)(4) group. It does not disclose its donors. And despite its active involvement in politics, it never ended up on a Lois Lerner list.)
When Josten says that “somebody” had to step up, this was why. The left had a very deliberate and organized plan after Citizens United—to get the federal government to harass and disclose the names of political actors, and then to use that information to isolate, humiliate, and intimidate those players out of politics on the back end.
Josten finds the attacks particularly frustrating, because, contrary to propaganda, Citizens United never did set off a rush of corporate spending. Even prior to the Supreme Court decision, more than half the states had no bar whatsoever on companies contributing directly in state and local elections. Yet even then, few did. Companies are nervy by nature. Some give; many don’t. They are always wary of bad PR.
So while Citizens did give them more rights, it didn’t result in a tidal wave of money. Even what corporate spending there is remains pathetic by comparison to union and liberal activist dollars. That goes even for the chamber. Yes, Donohue and Josten pumped up the political-spending budget. But the chamber’s $35 million in 2012 expenditures has to be compared to $1.7 billion that the National Institute for Labor Relations Research estimates organized unions spent in that cycle. “We are an eat-what-you-kill organization; we have to beg people to make contributions,” says Josten. “Companies tend to give money to their specific trade association first. We are about fifth in everybody’s line.”
Josten muses that what the left also always misses is that money never matters as much as ideas. He remembers billionaire casino magnate Sheldon Adelson giving millions to Newt Gingrich’s unsuccessful presidential run. Or Linda McMahon, World Wrestling Entertainment magnate, who spent $100 million on two failed bids for the Senate in Connecticut. “Endless money. But did they win? No,” says Josten.
Josten these days spends phenomenal amounts of time educating corporate executives—about DISCLOSE (which Democrats continue to push); about Citizens United; about proxy battles; about campaigns like those against Target and Best Buy and the chamber. “It’s something that has to be done, because those executives get nervous. They are responsible for the bottom line. And now politics has become more than civic debate; they worry it is a business risk.”
He also spends an inordinate amount of time educating Congress on the laws of the land. “Think about it. We’ve had enormous turnov
er. About 60 percent of Congress—they’ve only been here since the 2010 election. What the hell do they know about McCain-Feingold? Not much, is the answer,” he says.
Josten notes that he has on occasion gotten lucky; the left has slipped and made his job easier. The Media Matters memo is one example. He also references a 2013 article in the liberal publication Mother Jones, entitled “Revealed: The Massive New Liberal Plan to Remake American Politics.” In it, the reporter blew the lid off a private meeting attended by three dozen of the largest liberal organizations. The meet-up was by “invite only and off the record,” but it included the “top brass” of every influential left-wing organization in the country, from the NAACP, to the Sierra Club, to the unions, to Greenpeace. One goal of the meeting was to formulate a game plan to harass and intimidate companies. The attendees even listed a few targets, like Chevron, that they were already teeing up for particularly rough treatment. Another target was Google, which the group wanted to pressure out of its association with the chamber.
“You get a document like that, and it helps,” says Josten. “You take it to the C-suite and you say, ‘Don’t take my word for it—this is what they said in their own words. So consider yourself warned. The whole game here is to embarrass you and create a backlash and damage your corporation.’” His advice to these executives is always the same: Stay strong, stay clear, stay the course. Giving in just encourages them; they sense weakness.
But he acknowledges that it is “really hard to fight.” He circles back to the campaigns against the chamber by Obama and leading Democrats. “What do you do when you are on the wrong side of demagoguery? How do I knock down a completely untruthful statement, when it is the president of the United States saying it? These are people with a title. People that, rightly or wrongly, the public holds in some respect. We are so very small compared to that. And yet, to listen to them, we’re the one that needs silencing.”
Chapter 15
Shakedown
If you’ve never been to a corporate shareholder meeting, you’ve likely never heard of Justin Danhof. If you ever have been to one, you’ll likely never forget him.
Danhof runs something called the Free Enterprise Project, part of the National Center for Public Policy Research. NCPPR was founded in 1982 by Amy Ridenour, and its mission, as Danhof describes it, is to “build up the conservative free-market voice wherever we see it most quiet.” That’s how the think tank came to run Project 21, a black political outreach group. It’s why NCPPR formed a health care reform task force, after witnessing just how lazy so many Republicans were on health policy. (“That’s how we got Obamacare,” quips Danhof.) And it is how it came to own the Free Enterprise Project (FEP), which by self-description “exposes efforts by left-wing interest groups to divert businesses away from best practices and into left-wing advocacy.”
It’s a big mandate, and FEP over the years has done everything from exposing corporations that partner with left-wing activists in favor of bad regulation to publicly demanding that companies hold true to free-market principles. Danhof’s job in recent years has nonetheless come to center on just one issue: shareholder proxies.
Those proxies are today, alongside public pressure campaigns against the Chamber of Commerce and CEOs, the left’s favorite means of intimidating corporations into silence or submission. A sophisticated left-wing infrastructure exists to run the project, a sprawling collection of social investment funds, unions, public pension funds, online activists, and liberal brain trusts. Perhaps nobody in the universe knows more about this network and its tactics than Danhof, a thirty-three-year-old dynamo who took over FEP about four years ago, not long out of law school. Every spring proxy season, he’s a one-man proxy watchdog, jetting from corporate headquarters to corporate headquarters, trying to hold back the intimidation tide.
The left’s interest in proxies dates back at least fifteen years, and was spearheaded by the labor movement and some Soros-funded outfits. The strategy went on turbodrive after Citizens United. The idea is to seize control of the corporate proxy process, using public pressure, shareholder sentiment, and the fear of bad publicity to force companies to bow out of politics.
Activists manage this by abusing Securities and Exchange Commission rules on corporate governance. The SEC requires every public company to annually hold a meeting for shareholders—the true owners of companies. In the olden days, a company’s few shareholders would attend in person, voice their concerns, and vote on changes. Today’s shareholders are spread across the globe, so in-person voting is impossible. Shareholders instead vote by “proxy.” Think of it as absentee voting. Prior to the annual meeting, a shareholder is sent a list of proposals to be considered at the annual meeting; the shareholder votes the proxy ballot and returns it to the company.
Here’s the rub: According to SEC rules, any shareholder who has held at least $2,000 in stock for a year can introduce a proxy proposal. These proposals go through an SEC vetting process to ensure that they are relevant to corporate governance. The SEC has an incredibly indulgent view of “relevant.” This has allowed a slew of so-called social investment funds—organizations like Walden Asset Management, NorthStar Asset Management, and Trillium Asset Management—to buy a minimum of stock in targeted companies for the sole purpose of standing up proxy proposals that embarrass the companies out of politics or force them into liberal positions. These groups are supported by and tied to liberal outfits like As You Sow, a nonprofit that supports “corporate social responsibility.”
Most of the proposals are aimed at forcing disclosure, with the goal of creating more Target-like situations and pushing companies out of politics altogether. A successful disclosure proxy forces a company to be open about any donations to any politically active nonprofits (like Minnesota Forward). Employing the Media Matters strategy, the left then follows that money to politicians, and highlights the giving as a corporate “endorsement of everything that given politician has said or done.” PR nightmares, boycotts, and falling share prices ensue. Companies stop giving money.
“Social” investor groups like NorthStar justify their proxy work with the usual guff about a broader need for “transparency.” But since the SEC requires proxy proposals to have at least some relevance to actual business practices, Danhof explains that the most popular form of liberal proxy is what he’s nicknamed “political incongruency” proposals.
He explains, “So they start with some opening salvo about how awful Citizens United is, the floodgates are open, blah, blah. And then they say, ‘We want a list of all your political donations and political activity over the past year. And we need an annual report of this so that we can identify any of those donations or activities that are “incongruent” with your stated corporate policy.’
“What do they do then?” Danhof continues. “They get the disclosure information and then they go to the corporate site and say, ‘Hey, look here. You claim to be an environmental steward. However, in 2008, you gave $5 to an organization that supported this Republican senator, who voted against cap-and-trade legislation. Therefore you are “misaligned,” and you need to stop such donations.’”
Danhof finds the entire process insane. “It really is that attenuated. And the amazing thing is that the SEC accepts that bullshit. The activists argue that these proposals are somehow relevant, because the company is lying to shareholders, lying to the public. And it’s all about making companies go quiet.”
Danhof spends his day riffling through mountains of these proxies, and since Citizens United the mountains have grown taller. Activists in 2011—the first year after the Supreme Court ruling—filed a record number of shareholder proposals on political spending. According to the Manhattan Institute’s Proxy Monitor, 92 percent of these were sponsored by social investment funds or labor union pension funds.
The phoniest argument the activists use is that companies need to adopt disclosure policies in order to minimize their “risk.” One 2011 proxy fight came courtesy of Boston’s N
orthStar, which was bitter that Home Depot and Procter & Gamble had given money to the reelection efforts of Ohio Republican senator Rob Portman and Ohio Republican representative Steve Chabot. As with Target, P&G’s donation made sense. The company’s headquarters is in Cincinnati, and it has an interest in economic policies that would help shareholder value and employment.
Home Depot isn’t based in Ohio, but it also cares about free-market policies. In its demand for new rules, NorthStar told Home Depot that it was necessary the company adopt disclosure to reduce the “risk to the firm’s reputation and brand through possible future missteps in corporate electioneering.” Left unsaid was that the only groups ever likely to try to hurt Home Depot’s brand over politics would be NorthStar and its left-wing allies in the union and environmental and Democratic political movement. NorthStar wanted Home Depot to adopt NorthStar policies to save it from NorthStar.
Or take it from that same 2010 Media Matters memo, which laid out the exact strategy for the proxy battles. “The data in [our database on corporations] may also be used to launch shareholder resolution campaigns to prevent corporations from making these types of expenditures,” it read. “Working with partner organizations such as yours, we will help to make the case that political spending is not within the fiduciary interest of publicly traded corporations and therefore should be limited. In fact, our efforts to expose spending will enable us to make the case that a corporation’s political efforts have the potential to irreparably damage its brand and bottom line.” Media Matters made clear that its goal was to entirely shut down the opposing argument: “Over time, we believe these efforts will dissuade corporations from interfering in our democracy.”
The Intimidation Game Page 24