Co-authored by Nick Guroff, Corporate Accountability International
The independent Texas oil and gas corporation, Clayton Williams Energy, will no doubt be riding high when it hosts its annual shareholder meeting today. Profits and revenues are up, thanks in part to the corporation's fracking activities. Meanwhile, the corporation's stock price is hovering near its all-time high.
But all that glitters is not gold. Shareholders -- in particular big public pension funds and socially responsible institutional investors -- have reason to be not only wary and angry, but to threaten divestment from the corporation. Why exactly? For starters, the energy corporation has, for years, been abusing their trust to make undisclosed political donations to the National Rifle Association (NRA).
As illuminated in a recent report by our two organizations, the Gun Truth Project and Corporate Accountability International, the corporation has been quietly donating millions to the NRA over the past couple of election cycles. Although the exact figure is unknown, it is the NRA's largest non-firearm-related corporate donor. And, anyway you slice it, the contributions are bad news for shareholders, the public, and even NRA members. Such contributions, on the one hand, may explain why the NRA supported legislation to open public lands that hunters and sportsmen cherish to energy development. On the other, they may have nothing to do with the corporation's business interests and everything to do with the political leanings of its founding chairman and chief executive, Clayton Williams Jr., a one-time Republican candidate for Texas governor who has boasted that "the enemies of the National Rifle Association are enemies of mine."
That's not a line likely to resonate with the many teacher pension funds with sizeable stakes in Clayton Williams Energy -- among them the California, Texas and Florida state teachers' retirement funds and TIAA-CREF. They are more likely to think back on the unspeakable mass school shootings that have plagued this country, from Columbine to Newtown, and the NRA's vehement opposition to even modest attempts at legislation to keep guns out of the hands of criminals and the mentally ill.
Indeed, the backlash has already begun. Scott Stringer, the New York City Comptroller whose own public pension fund has more than 25,000 shares in Clayton Williams Energy worth more than $3 million, wrote a letter last month asking for a full accounting of the corporation's NRA contributions. "Absent a compelling corporate rationale," he wrote, "such payments would exacerbate longstanding investor concerns regarding the ability of... the board of directors to exercise independent oversight of Mr. Williams."
Williams is an unusual boss for a public corporation in that he retains personal control of a majority of the shares and, according to his own corporate literature, plays a "significant" role both in business strategy and daily operations.
Even though Williams has a sizable personal fortune and could easily donate to the NRA from his own funds, he has directed his corporation to give millions to the NRA and more since 2010, according to his own public statements, NRA documentation and SEC filings.
Shareholders should follow Stringer's lead by scrutinizing Clayton Williams lobbying and demand full transparency. As our report puts it:
"While there is no obligation for public companies to spell out their spending on political lobbying, [Williams] is doing a disservice to his shareholders by not keeping them fully informed on such a sensitive issue... This information gap constitutes a breach of trust."
And transparency is only the half of it. What we already know about how this corporation subsidizes the NRA's anti-gun safety lobby is sufficient grounds for divestment.
There is every indication public pension funds are inclined to agree. In the wake of the 2012 mass shooting at Sandy Hook Elementary School in Newtown, Connecticut, which left 20 children and six teachers dead, both the California public employees' pension retirement fund (CalPERS) and the state teachers' retirement fund (CalSTRS) divested from the gun industry. CalSTRS further leveraged its investment in the private equity firm Cerberus Capital Management to pressure Cerberus into selling its stake in the gun manufacturer Freedom Group.
They should use similar leverage with Clayton Williams Energy now, and for the same reasons. The NRA's insistent lobbying to put more guns in the hands of more people, regardless of the consequences, has put it out of step with mainstream opinion, including a majority of gun-owning Americans. Opinion polls have shown overwhelmingly support for a loophole-free system of background checks, yet the NRA has used its lobbying power to stop the requisite legislation from passing in Washington.
Clayton Williams Jr. is, of course, under no obligation to change his opinions. But he has no business using his publicly traded corporation to further his political agenda -- and to use the corporation's financial muscle to lobby against the public interest. His shareholders would do well to voice their disapproval loud and clear, and dump their stock today.