Who is Really Speaking for Corporations?

"If the First Amendment has any force, it prohibits Congress from fining or jailing citizens, or associations of citizens, for simply engaging in political speech.” This passage from the majority opinion in Citizens United summarizes the decision of the court. However, a major issue that I find with this ruling is deciding who is really speaking for the corporation. The majority gave corporations the right to spend and endorse political campaigns at its discretion, but who makes these decisions and how do we regulate this spending. With corporations, there always exists the issue of shareholder rights. According to the decisions in Citizens United, shareholders have the same right to free speech as the corporation does. How do we protect shareholders from having a corporation speak on their behalf where they do support such ideals? I believe it is imperative that legislators and the SEC, in response to this decision, draft new rules and regulations that would support the interests of both shareholders and corporations, protecting freedom of speech and shareholder rights.

One must think, will this decision by the court have an effect on shareholder investment and involvement in corporations? Will we see a dramatic change in how investors analyze options and choose which corporations to invest in? Will political analysis become a part of shareholderism? Allowing corporations to enter the political process may be a dangerous game. For some corporations, supporting a decision may be easy based on the fundamentals of that organization. Shareholder support for these endeavors may be overwhelming and unquestioned. However, what will be the result when there is great shareholder opposition to such a contribution? Can a corporation exercise reasonable business judgment when there is such a stark contrast with shareholder views? Will this clash lead to an increase in litigation over spending habits of the corporation and how it is furthering a business purpose?

As with other actions of a corporation, some decisions require a shareholder vote while others require a board vote. What should be the standard here? Is a political contribution a corporate decision that the shareholders have a right to vote on? I would argue ABSOLUTELY! In order to protect both free speech and shareholder interest, a corporation cannot be allowed to take a political stance based on the opinions of a few board members. It is imperative that the political position of the corporation reflect not only its board members views, but the views of its shareholders.

While this may sound like a good, in practical application, shareholder voting on a political issue may be a moot point. By the time that the shareholders could exercise their voting power, the election may be over and the opportunity for a contribution may have passed. So how do we both protect rights and allow free speech? In my opinion, the rights of the shareholders trump the need for corporations to contribute to the political process. I agree with Justice Stevens’ dissent in that allowing corporate free speech under the First Amendment was not the original intent of the drafters—protecting the American people was. In allowing a corporation to express its “free speech” through corporate spending at the expense of shareholders appears to change the intentions of the political process and corporate form. In essence this would make the free speech efforts of individual citizens less worthwhile and important as corporations can make a greater impact through spending. In order for the Citizens United decision to not, in effect, run away with the political process, it is crucial that shareholders have a voice in a corporation’s political activities. How this is to be accomplished remains to be seen.

With that final thought in mind, I close with a quote from President Barack Obama: “[the decision] gives the special interests and their lobbyists even more power in Washington — while undermining the influence of average Americans who make small contributions to support their preferred candidates….the Supreme Court reversed a century of law to open the floodgates for [corporations]…to spend without limit in our elections." While I do not go as far as to say corporations should never be involved in the political process, I think there has yet to be implementation of a system of checks and balances that would protect not only shareholders, but the American people as well, from corporate political spending running wild.