Eli Lilly – Transparency and Board Oversight for Political Contributions (2006)
Outcome: Successfully Withdrawn
Resolved that the shareholders of Eli Lilly (“Company”) hereby request that our Company provide a report, updated semi-annually, disclosing our Company’s:
- Policies and procedures for political contributions, both direct and indirect, made with corporate funds.
- Monetary and non-monetary contributions to political candidates, political parties, political committees and other political entities organized and operating under 26 USC Sec. 527 of the Internal Revenue Code including the following:
- An accounting of our Company’s funds contributed to any of the persons or organizations described above;
- Identification of the person or persons in our Company who participated in making the decisions to contribute.
- The internal guidelines or policies, if any, governing our Company’s political contributions.
This report shall be presented to the Board of Directors’ audit committee or other relevant oversight committee and posted on our Company’s website to reduce costs to shareholders.
As long-term shareholders of Eli Lilly, we support policies that apply transparency and accountability to corporate political giving. In our view, such disclosure is consistent with public policy in regard to public company disclosure.
Company executives exercise wide discretion over the use of corporate resources for political purposes. In 2003-04, the last fully reported election cycle, Eli Lilly contributed at least $337,000. (The Center for Public Integrity)
Relying only on the limited data available from the Federal Election Commission and the Internal Revenue Service, the Center for Public Integrity, a leading campaign finance watchdog organization, provides an incomplete picture of our Company’s political donations. Complete disclosure by our Company is necessary for our Company’s Board and shareholders to be able to fully evaluate the political use of corporate assets.
Lilly’s report One Strong Voice discloses 2004 corporate donations made on the state level, but fails to disclose all of the corporate contributions made to independent political committees, also known as 527s. Although the Bi-Partisan Campaign Reform Act of 2002 prohibits corporate contributions to political parties at the federal level, it allows companies to contribute to 527s. Also, the report states that a board comprised of employees oversees corporate donations to state candidates. There is no indication that oversight by independent directors, a critical part of accountability, is required. (One Strong Voice)
Absent a system of accountability, corporate executives will be free to use a company’s assets for political objectives that are not shared by and may be inimical to the interests of the company and its shareholders. There is currently no single source of information that provides the information sought by this resolution. That is why we urge your support for this critical governance reform.