Update: The link we included yesterday to NorthStar Asset Management, Inc. turned out to be a link to a temporary host while the company was doing website maintenance. We have replaced the old link with the current, correct one and appreciate NorthStar bringing the matter to our attention.
There were several tempting topics to write about in the preliminary proxy that The Western Union Co. (WU) filed yesterday. Ultimately, we passed on the juicy stuff about directors’ and executives’ compensation and perks and chose a subject that seemed more unusual – a new shareholder resolution that combines such issues as immigration, Western Union’s reputation, and its political contributions.
The proposal was submitted by NorthStar Asset Management, a self-described “progressive” investment firm that says it is “on the cutting edge of socially responsible investing.” While we don’t have a dog in this fight personally, it appears that NorthStar may have a point that Western Union is saying one thing, but doing another. We’ll go through some of the details and let you decide.
When we first started studying Western Union’s website, we found ourselves humming along to “It’s a Small World.” Besides photos of smiling faces from different racial and ethnic backgrounds, there were warm and fuzzy headlines such as “connecting families around the world,” and statements such as “At Western Union, we are proud to support migrants in their journey toward greater economic opportunity.” Another page on the website offers studies, a fact sheet, a summary, and presentations – all of which appear under the following text:
“December 21, 2009 – Despite reports of growing protectionist and nationalistic sentiment prompted by the global recession, world business leaders believe that migration continues to be good for business and the economy, according to a survey conducted by the Economist Intelligence Unit on behalf of Western Union.”
Yet according to NorthStar’s shareholder resolution, Western Union’s political contributions are at odds with its professed support for migrants and their families. After stating that “Western Union serves many of the financial needs of immigrant populations, with a major presence in poor and racially diverse neighborhoods (Urban Institute, 2004);” and —Many immigrants rely on companies like Western Union to send money to their families. Last year, migrants sent $260 million around the world came the zinger:
“Whereas, Western Union is committed to ‘foster[ing] a work environment of diversity and mutual trust,’ that is ‘characterized by respect and dignity for people'; yet just since 2010, The Western Union Company Political Action Committee (WUPAC) gave to politicians, including Congressmen David Dreier, Ed Royce, and Spencer Bachus who ‘sign[ed] a legal brief in support of the State of Arizona’s [draconian] law’ on immigration that even conservative presidential candidate Governor Rick Perry of Texas does not support because it would harm relations ‘with Mexico, our largest trading partner.'”
NorthStar wants Western Union’s board to adopt a policy so that future proxies will disclose which candidates WUPAC has supported (or plans to support) and how much it has given them. It also wants management to analyze “congruency with company values and policies of those political and electioneering policies, and of resultant expenditures for the prior year and the forthcoming year” and give shareholders an advisory vote on the company’s policies and future plans.
As one might expect, Western Union’s Board of Directors opposes the resolution. It argues that the company “has historically made only an extremely limited number of political contributions”, donating only about $32,000 in 2011 and approximately $18,600 in 2010. It remains to be seen whether those contributions will increase this year, with a major election coming in the fall. The board further argues that its formal policy for donations is available on the corporate governance section of the website, that donations must first be blessed by the General Counsel’s office, that information about the donations is publicly available through the Federal Election Commission’s website, that providing such information would cause “unnecessary work and distraction”, and – finally – that “…the Company believes that disclosure of the Company’s rationale for past and future political contributions could disclose sensitive information regarding the Company’s business plans and strategies and, as a result, is not in the best interests of the Company’s stockholders.”
We also took a peek at the Center for Responsive Politics’ website, which slices and dices information in more detail than the FEC’s site does. It shows some of the same information and notes that for the current election cycle, 55% of WUPAC’s donations to federal candidates have been to Democrats, while the other 45% have gone to Republicans. (That is consistent with the last three election cycles, according to this graph.) We did find that Western Union’s PAC gave a $2,000 donation to Sen. Richard Shelby’s (R-Ala.) Defend America PAC.
Whether the issue resonates with other shareholders will become clear after they vote at the May 23, 2012 annual meeting. This will be an interesting one to watch.