The SEC has given the green light for shareholders in Fox Corporation to vote this fall on a proposal regarding the company’s lobbying activities.
The proposal, filed by Kenneth Steiner on behalf of John Chevedden, requests that Fox prepare an annual report disclosing:
- Company policy and procedures governing direct and indirect lobbying and ‘grassroots lobbying communications’
- Payments by Fox used for direct or indirect lobbying or grassroots lobbying communications, noting the amount of the payment and the recipient
- Fox’s membership of and payments to any tax-exempt organization that writes and endorses model legislation
- Management’s and the board’s decision-making process and oversight regarding payments for lobbying and grassroots lobbying communications.
The proposal defines a grassroots lobbying communication as a communication directed to the general public that: (a) refers to specific legislation or regulation, (b) reflects a view on the legislation or regulation and (c) encourages the recipient to take action. Indirect lobbying is that undertaken by a trade association or other group of which Fox is a member.
‘Fox does not disclose its memberships in, or payments to, trade associations and social welfare organizations, or the amounts used for lobbying, including grassroots. Grassroots lobbying does not get reported at the federal level under the Lobbying Disclosure Act, and disclosure is uneven or absent in states. And Fox does not disclose memberships in tax-exempt organizations that write and endorse model legislation, such as the American Legislative Exchange Council,’ the supporting statement says.
‘Absent a system of accountability, company assets could be used for objectives contrary to Fox’s long-term interests. Fox’s lack of lobbying disclosure presents reputational risks that could harm long-term value creation.’
Fox unsuccessfully sought no-action relief from the SEC if it excluded the proposal from its proxy statement on the grounds that it was allowable under Rule 14a-8(i)(10) – that the company has ‘substantially implemented’ the proposal.
Fox argues in its no-action request that it already discloses the information at issue and the board oversees the company’s political engagement. It says the company’s policies and disclosures involve, among other things:
- A company-wide political activities policy that it publishes on the company’s website and that ‘address[es] all aspects of political engagement, including lobbying at all levels of government, employee political contributions and direct employee participation in the political process’
- A publicly available quarterly report on Form LD-2 filed with the US House of Representatives disclosing: overall aggregate expenses associated with federal lobbying activity; names of all registered lobbyists employed by the company and their related policy areas; and specific bills on which the company has lobbied. The reports include the amount of dues paid to trade associations that are allocated for lobbying
- Disclosure of political contributions made by the Fox political action committee that are available on the Federal Election Commission’s website.
The company states that it does not report its spending on grassroots lobbying communication ‘because there is no generally accepted definition of [the term], and moreover the Lobbying Disclosure Act does not require disclosures related to such communications. Accordingly, it would be impossible to determine whether any given communication qualifies as such, in particular because the company is a news organization with a substantial amount of opinion programming.’
The SEC did not agree that Rule 14a-8(i)(10) provides a basis to exclude the proposal.
Fox has not yet filed its proxy statement with the SEC. Its 2020 AGM took place on November 12.
A spokesperson for the company did not respond immediately to a request for comment.