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126 Yale L. J. 262 (2016-2017)
Shareholder Proposal Settlements and the Private Ordering of Public Elections

handle is hein.journals/ylr126 and id is 286 raw text is: SARAH C. HAAN Shareholder Proposal Settlements and the Private Ordering of Public Elections A B ST R ACT. Reform of campaign finance disclosure has stalled in Congress and at various federal agencies, but it is steadily unfolding in a firm-by-firm program of private ordering. To- day, much of what is publicly known about how individual public companies spend money to influence federal, state, and local elections -and particularly what is known about corporate dark money - comes from disclosures that conform to privately negotiated contracts. The primary mechanism for this new transparency is the settlement of the shareholder pro- posal, in which a shareholder trades its rights under SEC Rule 14a-8 - and potentially the rights of other shareholders -for a privately negotiated social policy commitment by corporate man- agement. Settlements of campaign finance disclosure proposals are memorialized in detailed pri- vate agreements that set the frequency, format, and substance of disclosure reports; are enforced by private actors; and typically are not available to other shareholders, corporate stakeholders, or the public. Proposal settlements are producing a body of private disclosure law that increases corporate transparency to advance First Amendment values and is exempt from First Amend- ment scrutiny. The disclosure standards themselves are a mixed bag: effective at filling some gaps in public campaign finance disclosure law, but inadequate to make corporate electoral spending transparent in advance of elections. As a form of private electoral regulation, the proposal settlement mechanism raises issues of democratic transparency, participation, accountability, and enforcement. This Article challenges the characterization of proposal settlements as voluntary corporate self-regulation, provides a framework for understanding settlement-related agency costs, and shows how settlement sub- verts the traditional justifications for the shareholder proposal itself. Solutions that address the democratic and corporate governance problems of settlement largely overlap, suggesting a path forward. A U T H O R. Associate Professor, University of Idaho College of Law. B.A., Yale College; J.D., Columbia Law School. I am grateful to Richard Briffault, Wendy Couture, Benjamin Cover, Ben- jamin Edwards, Jeffrey Gordon, Michael Guttentag, Joan Heminway, Cathy Hwang, Virginia Harper Ho, Katherine Macfarlane, Benjamin Means, Alan Palmiter, Kish Parella, Elizabeth Poll- man, and Anne Tucker for their generous comments and thoughtful questions. Thanks also to participants in faculty workshops at the University of Idaho College of Law, the University of Oldahoma College of Law, and the University of Washington School of Law, and at the Private Ordering and Public Norms Roundtable at Washington and Lee School of Law. Finally, special thanks to the editors of the Yale Law Journal, and to the individuals who provided interviews and documents for this Article. 262

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