Response to WSJ Editorial Intimidation by Proxy In its May 8, 2012 editorial, the Wall Street Journals editors conflate

shareholders call for transparency and accountability in corporate political spending with attacks on free speech itself. This position conveniently ignores the Supreme Courts ruling in Citizens United v. Federal Election Commission, which not only reaffirmed the importance of disclosure, but did so as it advanced corporate free speech. In fact, these are two sides of the same coin, with the rights to corporate free speech stemming from the collective representation of shareholders. Also ignored is the Supreme Courts broader declaration that disclosure permits citizen and shareholders to react to the speech of corporate entities in a proper way. For shareholders transparency is thus essential to ensure that political spending is used to advance the interests of shareholders, and not the parochial or short-term objectives of incumbent executives. There is no better example of the dangers posed for shareholders from opaque and unaccountable political spending than WellPoint. WellPoint participated in the secret funneling of $86 million to the U.S. Chamber of Commerce via the Americans Health Insurance Plans (AHIP) trade association, in order to run attack ads against health care reform, even as it made public statements in support of key provisions included in the proposals. This alarming activity, bordering on duplicity, risked jeopardizing the health care reform effort that WellPoint endorsed as part of its long-term interests. At the same time, with four board members part of the Capitol/K-Street revolving door at the time of the contribution, it is implausible that shareholders could have relied on the boards independent judgment. Former Senator Donald W. Riegle, for instance, as a senior executive of APCO Worldwide, was approving the flow of funds to AHIP and the U.S. Chamber of Commerce at the same time as APCO was being paid $3.8 million and $17.4 million by those two organizations, respectively. Moreover, WellPoint had already entered into an agreement with shareholders in 2007 to disclose all trade association dues and similar payments. Instead of abiding by this agreement and disclosing the AHIP/U.S. Chamber of Commerce payments in a timely manner, the WellPoint board broke its bond. Why should shareholders trust such directors going forward? Make no mistake: the real target of this position is the broad coalition of global shareholders united in pushing for transparency and accountability in corporate political spending, including members of the International Corporate Governance Network and the Council of Institutional Investors, which endorse disclosure and collectively represent $21 trillion in assets. In penning its second editorial on the issue in just 2 months (see editorial The Corporate Disclosure Assault, March 19, 2012), the Journal is sending a chilling message: renounce principles of good corporate governance or face baseless and misleading attacks from the supposed voice of business.

Richard Clayton Research Director, CtW Investment Group