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Shareholders Revolt Over Target Donations To Anti-LGBT Minnesota Candidate

08/20/10-by Bridgette P. LaVictoire
Target Corp’s top people may be willing to ignore MoveOn and the Human Rights Campaign.  They may even be willing to ignore the growing number of protests and people leaving Target in boat loads.  The question is, will they ignore their shareholders?  The internal pressure comes as the backlash against Target continues to grow over a donation to a Minnesota PAC backing gubernatorial candidate Tom Emmer, who is avowedly anti-LGBT.  Shareholders, angry over this donation, have called for a revamp of the donation process to avoid any additional backfires in the future.

While many companies are more than willing to donate to politicians, there is a new cost to that now that the decision Citizens United has taken the cap off the limits on how much money can be funneled into a given politician’s coffers.  That cost is just how much of a risk of backlash are they willing to entail.  The laws that the Citizens United decision took down restricted companies with regards to direct contributions, but they could put out single issue campaigns all that they wanted.  Now, they have the ability to support a given candidate, and that can create more problems as they now have to support everything that particular candidate stands for, and in this case, that means supporting Emmer’s anti-LGBT stances as well as his so-called small government platform.

Tim Smith, a senior vice president at Walden Asset Management, stated “Imprudent donations can potentially have a major negative impact on company reputations and business if they don’t carefully and fully assess a candidate’s positions.”  He also cautioned about funding ballot initiatives, as several corporations have done, as they can also backfire.  Walden Asset Management is one of three management firms sponsoring a resolution for Target to restructure their donation policies.  They are joined by Calvert Asset Management, Trillium Asset Management, and may be joined by others.  Together, those three hold $57.5 million of Target’s stock.

Ola Fadahunsi, spokesman for New York Comptroller Thomas DiNapoli, who holds Target’s New York pension fund, stated “Target should have carefully considered the implications that direct political contributions can have toward shareholder value.  It’s troubling to think that they can fund controversial candidates without properly assessing the risks and rewards involved.”  They are also considering signing on to the resolution.

Target was not the only Minnesota company to donate to MN Forward, which is backing Tom Emmer.  Best Buy also donated to the group; however, Best Buy has been receiving less criticism than Target.  Jessica Carlson, spokeswoman for Target, refused to comment on the resolution.  Instead, she pointed to a statement from Target CEO Gregg Steinhafel that Target would “begin a strategic review and analysis of our decision-making process for financial contributions in the public policy arena.”  The investor’s resolution calls for a rigorous and specific review by independent board members and for disclosure of the company’s contribution policy.

Sue Busch Nehring, a spokeswoman for Best Buy, said that the company would review the resolution and that it had learned from this.  Both companies donated to MN Forward on the basis of economic self interest.  Steinhafel said in an email to his employees “The intent of our political contribution to MN Forward was to support economic growth and job creation.”

MN Forward bills itself as non-partisan, but it was only after the controversy blew up that they began spending money on a couple of Minnesota Democratic candidates.  Given that, the resolution is also asking retailers to consider how the donations look to the public and effect the company’s public image.

Equity Foundation of Portland, Ore, which deals through Trillium, has announced that it will be divesting its stock in Target forthwith.  They have already ordered Trillium to liquidate the stock that they hold because they are troubled by Target’s choice of politician to back.

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