New CPA-Zicklin Index Flawed

“Like asking a wolf to describe ‘best practices’ for sheep.”

The Center for Competitive Politics (CCP) today criticized the newly released 2013 Center for Political Accountability (CPA-Zicklin) index as a “flawed and partisan measure of corporate accountability.” CCP simultaneously released a new series of short videos, “Behind the Movement: How Political Partisans Are Trying to Silence Corporate Speech,” explaining the issues surrounding efforts by CPA and other political partisans to silence corporate speech.”

“To look at the CPA-Zicklin Index as a measure of ‘best corporate practices’ is like asking a wolf to describe ‘best practices’ for sheep,” said CCP Chairman Brad Smith, former Federal Election Commission Chairman. “Corporations have an obligation to do what is in the best interest of their shareholders, not comply with the demands of a non- profit that opposes speech by the business community.”

The videos debunking CPA’s oft-repeated claims feature former SEC Commissioner Paul Atkins, Director of the Manhattan Institute’s Center for Legal Policy James R. Copland, former Federal Election Commission Chairman Bradley A. Smith, and CCP Legal Director Allen Dickerson.

“With all of the misinformation peddled by groups like the Center for Political Accountability, it’s important to recognize the implications of activist investing and dragging the SEC into politics,” said former Brad Smith. “CPA has no obligation to worry about the actual interests of shareholders, and nothing suggests that they have the best interest of the business community at heart.”

“The overwhelming majority of shareholders are primarily concerned with company value,” said CCP Legal Director Allen Dickerson. “Politicizing corporate governance doesn’t deliver that value. Perhaps that is why these misguided proxy efforts are consistently rejected by the very shareholders whose interests they purport to represent.”

The Index purports to rank companies that engage in “best corporate practices” for disclosure. CPA, which released the Index today, devotes most of its energy towards pushing shareholder resolutions that would tamp down on corporate speech. CPA’s President and Founder, Bruce Freed, is a former Democratic congressional aide, and the organization is staffed by former union and Democratic Party activists and staff. CPA does not disclose it own donors or politically related activities.

Covering issues ranging from legal concerns raised by SEC regulation of political spending to the history of shareholder activism, the series of 30 to 90 second videos released today at ProxyFacts.org offer valuable insight into the latest efforts to regulate corporate speech for purposes other than shareholder value.

According to the Manhattan Institute’s Center for Legal Policy, disclosure proposals were introduced more often than any other proposal type in 2013, constituting 20 percent of all proposals among Fortune 250 companies. However, none of these proposals to Fortune 250 companies attracted majority support, receiving average support from only 18 percent of shareholders in 2013, down from nearly 25 percent in 2011.

The videos were released through ProxyFacts.org, a site examining and debunking common myths spread by activists seeking to silence corporations. Launched during the latest proxy season, ProxyFacts.org is a resource for investors, reporters, legislators, and corporate governance professionals with an interest in the issue.

You can view the videos at this link.

The Center for Competitive Politics promotes and defends the First Amendment’s protection of the political rights of speech, assembly, and petition. It is the nation’s largest organization dedicated solely to protecting First Amendment political rights.