CEOs: Living on the Edge of Shareholder Relations

If, as the majority of the Supreme Court ruled in Citizens United v. FEC, a corporation has the right to express its voice in an election, whose voice is being represented? Does the CEO speak for the corporation, or do the comments represent the views of the board of directors? What about the shareholders?

A company’s Board of Directors has a “fiduciary obligation to shareholders” which is reflected in its power and responsibility to “hire, fire, compensate and monitor top management.”

That being said, it could be argued that the statements made by the Chief Executive Officer (CEO) are made on behalf of the Board (that has the power to remove him or her) and the shareholders (whose stock purchases) it represents.

According to the ruling of First National Bank of Boston v. Bellotti, “corporations and other associations, like individuals, contribute to the discussion, debate and the dissemination of information and ‘ideas’ that the First Amendment seeks to protect.”

This precedence played a key role in the majority decision presented in the Citizens United v. Federal Elections Commission case of 2009. Justice Kennedy stated that, “With the advent of the Internet…shareholders can determine whether their corporation’s political speech advances the corporation’s interest.”

As such, the Court decided to lift the ban restricting corporations and unions from using corporate money to influence stakeholder elections. Since this decision passed in 2009, numerous local, state, federal and even a national election have occurred. In light of the roles some corporations have played in electioneering

According to Nicholas Confessore of The New York Times, statements from Citizens United are being used by shareholder activists to petition the Securities and Exchange Commission to establish a rule “to require public corporations to disclose to shareholders all political donations.”

Shareholders and government officials claim that “evidence has mounted that a significant portion of the money came from companies seeking to intervene in campaigns without fear of offending their customers, their shareholders—or lawmakers they target for defeat.”

shareholder activistsIf these concerns are true, it could be argued that stakeholders and shareholders are concerned about the secret campaign spending of corporations and how they are influencing elections—a concern that was directly expressed during the Citizens United case.

If public companies or the government don’t respond to these concerns, it will increase the suspicion that corporations are more concerned with economic motives than the well being of their shareholders. If this is true, one must question the protections allowed companies under political speech.

If the speech and actions are economically motivated and aren’t geared towards political advancement or in the interest of public opinion—why should corporations be allowed to influence elections with their deep pockets?

It is my opinion that shareholders should have the right to question what candidates a corporation supports and how these actions affect the future of the company. While having shareholders vote for a candidate may slow down the process, it would also remove the veil of ignorance that currently shrouds corporate spending during elections. This argument is supported by the Court’s decision in Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council, Inc.

It could also be argued that the support a public company provides a candidate should be made just as public as the support provided by PCAs since it is a matter of public interest and can be a deciding factor for specific shareholders as they decide which companies to invest in.

CEOs who publicly oppose to this possible SEC ruling should be wary of shareholder backlash. According to Gillan and Stark (2007), “the probability of CEOs being replaced increases after large sell-offs.” That being said, a CEO who does not support and protect the interests of the shareholder (be it political or economical) will be quickly replaced with one who will.

Who is to say that investors will appreciate a CEO’s unwillingness to support the public interests that they exercised their freedom to petition to expressed?


  • Gillan, S. & Starks, L. (2007). “Evolution of shareholder activism in the United States.” 1-51.
  • Kennedy, A. M. (2010). “Supreme court of the united states citizens united, appellant v. federal election commission.” 21 Jan 2010.
  • Moore, R. et al (2011). “Advertising and public relations law.” 2nd Edition.

Yasheaka Oakley Owens

Yasheaka Oakley Owens is the owner of YOakleyPR, a woman-owned small business that provides public relations, social media, and online marketing support services to small businesses and 501(c)(3) nonprofit organizations in Southeastern Pennsylvania, Southern New Jersey and Delaware.

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