Lobbying Expenditures Disclosure - Climate

2019 – International Business Machines Corp. (IBM)

WHEREAS, we believe in full disclosure of our company’s direct and indirect lobbying activities and expenditures to assess whether its lobbying is consistent with IBM’s expressed goals and in the best interests of shareowners.

IBM spent $39,950,000 from 2010 - 2017 on federal lobbying (Senate reports).  This total does not include expenditures to influence legislation in states, where IBM also lobbies but disclosure is uneven or absent. A study found IBM spent $2,005,196 lobbying in six states from 2012 - 2015 (“How Leading U.S. Corporations Govern and Spend on State Lobbying,” Sustainable Investments Institute, February 2017

RESOLVED, the stockholders of IBM request the preparation of a report, updated annually, and disclosing:

1. Company policy and procedures governing lobbying, both direct and indirect lobbying communications.

2. Payments by IBM used for (a) direct or indirect lobbying or (b) grassroots lobbying communications, in each case including the amount of the payment and the recipient.

3. Description of the decision making process and oversight by management and Board for lobbying expenditures.

For purposes of this proposal, a “grassroots lobbying communication” is a communication directed to the general public that (a) refers to specific legislation or regulation, (b) reflects a view on the legislation or regulation and (c) encourages the recipient of the communication to take action with respect to the legislation or regulation. “Indirect lobbying” is lobbying engaged in by any trade association or other organization of which IBM is a member.

Both “direct and indirect lobbying” and “grassroots lobbying communications” include efforts at the local, state and federal levels.

The report shall be presented to the Audit Committee or other relevant oversight committees and posted on IBM’s website.

Supporting Statement: We commend IBM for its thoughtful policy regarding political spending and the electoral process prohibiting political contributions with company funds. We believe IBM should also establish high standards for evaluating and disclosing company participation and spending in the legislative process through lobbying as well.

IBM sits on the board of the Chamber of Commerce, which has spent over $1.4 billion dollars on lobbying since 1998, and belongs to the Business Roundtable (BRT), an organization with approximately 200 CEOs as members. IBM does not disclose its memberships in, or payments to, trade associations, or the amounts used for lobbying. In contrast, competitors Microsoft, Xerox and Intel publicly disclose their indirect lobbying expenditures through their trade associations.

We are concerned that IBM’s lack of trade association lobbying disclosure presents reputational risk. For example, IBM recognizes climate change is a serious concern that warrants meaningful action, yet the Chamber opposed the Paris climate accord (“Paris Pullout Pits Chamber against Some of Its Biggest Members,” Bloomberg, June 9, 2017). And the BRT is lobbying against the right of shareholders to file resolutions, whereas IBM is justifiably proud of its record of engaging shareholders in constructive conversation. IBM’s payments to the Chamber and BRT help fund such attacks.

This resolution received a 32.9% vote in 2018.