(The following story by Stacie Hamel appeared on the Omaha World-Herald website on April 16.)
OMAHA — A corporate governance watchdog group will make its case today that twice a year Union Pacific Corp. should report its political contributions to shareholders.
A company spokeswoman said the Center for Political Accountability mischaracterized U.P.’s 2002 political contributions in an effort to sway shareholders before the company’s annual meeting in Salt Lake City.
The Washington, D.C.-based center distributed information this week reporting that U.P. made $1,032,022 in corporate contributions in the 2002 election cycle and that the company “gave to conduits that, in turn, contributed to controversial groups” such as Texans for a Republican Majority and the Traditional Values Coalition. The latter opposes gay rights, abortion rights and the teaching of evolution in public schools.
U.P. spokeswoman Kathryn Blackwell said some contributions went to Americans for a Republican Majority, which in turn supported other groups, including Texans for a Republican Majority and the Traditional Values Coalition.
“That is a choice that they made. We don’t have a say in what they do with their PAC (political action committee) money,” she said. “That is a risk we take. We would not have chosen to give our own money to the Traditional Values Coalition, by any means.”
Texans for a Republican Majority asked Union Pacific for a contribution and was turned down, Blackwell said. The company, however, did contribute directly to 11 candidates also supported by Texans for a Republican Majority.
Most of the political contributions came from employee funds donated to the company’s Fund for Effective Government, she said.
Characterizing those donations as corporate contributions “is absolutely wrong,” Blackwell said. “The vast majority of that money was our employee contributions . . . which is not considered corporate money.”
Bruce Freed, co-director of the Center for Political Accountability, said corporate disclosure of political donations is the next level of corporate governance reform.
“Under the U.S. Patriot Act, corporations are required to do due diligence on what happens to contributions after they give the money,” Freed said. “This is a new, broader view of corporate governance reform.”
Union Pacific is one of about 30 companies to which the group has submitted political disclosure shareholder proposals. U.P.’s annual meeting is first among those companies.
The Center for Political Accountability, which was formed last fall, does not own U.P. stock. The proposal was submitted by the Central Laborers’ Pension, Welfare & Annuity Funds, which owns 1,600 U.P. shares and has been active in corporate governance issues since 1998. That organization deputized a representative of the Center for Political Accountability to speak on the proposal’s behalf at the meeting, Freed said.
Shareholders at today’s meeting also will vote on an employee incentive plan that would allow up to 21 million shares of stock to be granted as options, appreciation rights, retention shares, stock units or incentive bonuses.
One other shareholder proposal will be presented for a vote. The Brotherhood of Locomotive Engineers union, based in Cleveland, proposes that stock options no longer be awarded as incentives for senior executives. Incentive plans instead would use restricted shares.
The restricted shares would vest over a period of at least three years, would be awarded based on operational performance measures disclosed to shareholders, yield no dividends or proxy voting rights before vesting, and be retained for the executive’s tenure with the company.