Corporate politicization: opposing a disturbing trend
Rather than boycotting or complaining about this trend, I decided to talk to the executives of the companies we own.
I a m member of a team that designs and manages investment funds. My colleagues and I are increasingly concerned about the politicization of listed companies. Rather than boycotting or complaining, however, we decided to talk to the executives of the companies we own. We have written to all of the companies we own in our two national equity portfolios – or at least all, 313 in total, that care enough about shareholders to publish the email address for their relationship departments. respective investors – asking them to discuss the following with us:
We are invested in you.
We own shares in your company because we believe you offer a healthy combination of profitability and effective leadership and corporate governance at an attractive valuation level. We have chosen to invest scarce capital in you because we believe that you embody one of our key principles: the importance of human productivity which represents for us the way in which wealth is created.
We are not political activists, who buy the minimum number of shares in order to try to get companies to take certain political positions, but rather an institutional investor who buys shares of public companies to maximize the probability of obtaining a good return for our fund shareholders.
We wanted to present to you what we, as shareholders, expect from the board of directors and senior management of your company in terms of political activity and social engagement.
We expect you to stick to your mission, which is to create wealth through excellence, innovation and prudent growth. This is your social mission.
The assets that you manage, you manage them on our behalf. You are the stewards of our clients’ wealth. Stewards are required to be found faithful to those who have entrusted them with goods.
When companies get tempted, intimidated, cajoled, nudged or otherwise drawn into various political issues of the day that are not at the heart of the company itself, whether by political activists, the media, the services proxy or Twitter crowds, they are off mission. and, frankly, the misuse of shareholder resources.
In addition, taking a stand on sensitive issues peripheral to their business operations exposes companies to a variety of unnecessary risks, such as alienation of a large portion of their current potential customer base, as well as legal, policy and regulatory backlash.
Opinion polls show that a majority of Americans, including members of both major parties, oppose such policies by state-owned companies.
Additionally, engaging on divisive issues, especially when done in a non-impartial manner, sends a message to employees who are not ideologically aligned that they may not be safe to express their views, especially in companies where the human resources policy does not guarantee diversity of views for employees who do not agree with the public policy statements of the company or its management.
We recommend that you have a written guarantee that employees will be protected from discrimination based on the employee’s point of view.
We stand by the principle of universal human dignity, which means protection for employees regardless of their lifestyle choices and for the conservative religious employee who might see things in a different way.
Needlessly touching on hotly debated topics by publicly traded companies undermines the dignity of customers, employees, shareholders and citizens who are on the side opposite to the topic in question.
A community is sort of like a human body, in which different groups of people – different offices and institutions – function as different members and organs. The publicly traded company is a miracle of human improvement. He has helped lift large sections of the human family out of abject misery and into growing prosperity. In the body politic, corporations are the strong arms that turn the dynamo of increasing productivity, not the mouth that lectures the world about politics. We already have other institutions such as political parties and campaigns to fulfill the political role. They can be the mouth; you should continue to be the arm.
This is something we would like to discuss with you, either privately through the Investor Relations office or in public at the next annual meeting.
Are you open to discussion?
In the meantime, keep up the good work. Keep running this dynamo and thank you for managing our assets with excellence.
Jerry Bowyer, Chief Economist, Vident Financial
President, Bowyer Research