Intel isn’t the only tech company with a political action committee funneling money into Congress. But some of Intel’s recent donations — including to politicians known for opposing marriage equality like North Carolina Senator Richard Burr and a PAC supporting Minnesota Representative Tom Emmer — have alarmed shareholders, who are now proposing a resolution that would force the chip-maker to publicly explain political donations that don’t line up with its stated policy positions.
The proposal is the brainchild of NorthStar Asset Management, a firm that frequently pushes tech companies to more closely evaluate their political contributions. Julie Goodridge, the CEO of NorthStar, told TechCrunch that Intel agreed in 2013 to offer explanations of incongruous donations to shareholders, and enshrined the agreement in its political accountability guidelines.
But now, Goodridge says, Intel is going back on its promise and refusing to justify its contributions to politicians who oppose LGBT rights or deny climate change. When Intel updated its political accountability guidelines after the November election, the sentence about explaining “significant incongruencies between a candidate’s record and our own policies” had vanished.
In a recent SEC filing, Intel’s board said it is “unrealistic” to expect the company or its stockholders to agree with every stance taken by a politician who receives contributions from Intel. The board also noted that it conducts an annual review of its political contributions to make sure they align with corporate policy.
Intel CEO Brian Krzanich, a self-described #LGBTQAlly, has championed diversity in Silicon Valley and vocally opposed anti-LGBT legislation. The company discloses its positions on a number of political concerns, including the environment and immigration, and Intel signed on to a legal brief opposing President Trump’s immigration order. But Krzanich has also become one of Trump’s allies in the tech industry, cozying up to the president during an announcement of a new Intel factory and praising Trump’s tax and regulatory policies. During the campaign, Krzanich planned to host a fundraiser for Trump, but backpedaled after the event attracted media attention.
Over the years, Krzanich has positioned himself — and, by extension, Intel — as an ally to immigrants and LGBT people, but that position is belied by some of Intel’s PAC spending. Controversial donations translate into risk for stockholders, Goodridge says.
“The company’s message about their behavior in the world becomes part of who the company is. If companies didn’t care how they were perceived, they wouldn’t jump through all these hoops to advertise and appear to be good citizens,” Goodridge explains. As shareholders, she adds, NorthStar is concerned with Intel’s revenue but its behavior counts too. “There is additional value in the behavior of the company because bad behavior exposes them to risk and risk exposes them to financial consequences,” she says.
Just like similar PACs at Facebook and Google, Intel’s PAC is funded by voluntary donations from its employees (Krzanich himself is a regular contributor). Tech workers who want to contribute to their employers’ lobbying efforts can opt to fund the PAC, which in turn divvies up the money between members of Congress, candidates, ballot initiatives and other PACs. Intel’s Congressional donations tend to split almost evenly along party lines — the company doesn’t want to be perceived as heavily favoring Democrats or Republicans. In 2015, the most recent year for which Intel has published its PAC contributions, Intel gave slightly more to Republicans.
The employee PAC system tends to obfuscate where the money ends up, so it’s not always clear to employees or even CEOs how their political contributions are being spent.
During the backlash against SOPA and PIPA in 2011, NorthStar brought a similar proposal at Google, asking the search giant to stop donating to members of Congress who supported the twin bills. At a shareholder meeting where the NorthStar proposal was being considered, Alphabet executive chairman Eric Schmidt said Google had already stopped contributing to SOPA supporters — but a NorthStar representative quickly retorted that Google had just given to Bob Goodlatte, a co-sponsor of SOPA. (Google declined to comment on the meeting.)
“What was startling and shocking among all this is the people who are doing the marketing or doing some level of oversight in policy have very little idea about what’s really going on in terms of dollars going out to support politicians who are for or against stuff they care tremendously about. That points to poor governance,” Goodridge says.
NorthStar’s policy objectives trend liberal, but the firm’s goal with its Intel proposal isn’t to dry up funding for conservatives. Instead, NorthStar takes issue with contributions to specific Congressmen whose policy positions don’t align with Intel’s own stated political objectives. The question NorthStar poses is: Why fund a Congressman who’s actively working against you?
The current tech PAC strategy of handing out contributions to almost every member of Congress isn’t effective, NorthStar argues.
“If these companies are giving contributions to every politician without discrimination, the politicians are beholden to no one. They know they are going to get the contributions regardless of the position they take,” says Christine Jantz, chief investment officer at NorthStar.
Perhaps Intel believes that donating to its political opponents buys a seat at the table, which its lobbyists might use to convince a Congressman to change his mind on a particular issue. TechCrunch contacted a member of Intel’s board who oversees its political work for comment on the motivations that drive Intel’s PAC spending. The board member referred TechCrunch to an Intel spokesperson, who did not respond to several requests for comment. Intel’s board is recommending that shareholders vote against NorthStar’s proposal.
NorthStar, which holds Intel shares worth more than $3 million and also invests heavily in Facebook and Google, has a history of challenging companies’ electioneering practices.
“I want Intel to be held accountable for the fact that they agreed to something with shareholders and they backed off of that agreement,” she said. “Intel hasn’t been doing well lately. They’ve been having a lot of problems, they’ve made some bad business decisions around growth prospects and they’ve missed market opportunities by becoming somewhat stagnant in terms of product development. And we wonder if that plays into this not really paying attention to what the heck they’re doing — including with their political contributions.”
Shareholders have lately grown skeptical of corporate donations to political figures. The holding company Berkshire Hathaway is facing a similar shareholder proposal that would require the company to publish a biannual report disclosing its political contributions. Berkshire is headed by Warren Buffet, a Democratic mega-donor.
Intel is already ahead of Berkshire in that regard. The company releases reports documenting the contributions made by its employee PAC. But releasing these reports without explanation of controversial donations might create more risk for shareholders, NorthStar argues.
“Mitigating the risks that come with those disclosures is vital for the success of the company and shareholder value,” the firm wrote in its proposal. Shareholders will vote on the proposal during a meeting on May 18.