Retailer Target was once seen as a paragon of socialresponsibility. The company offers scholarships and steers 5% ofprofits to programs in the communities in which its stores arelocated. As recently as 2008, socially responsible investment firmshailed it as a model business. Then last summer, Target became atarget–of a boycott by activists angry that the company contributed$150,000 to Minnesota Republican gubernatorial candidate Tom Emmer,known for his opposition to gay marriage.

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Target could well find itself facing an embarrassing shareholderresolution seeking a proxy vote on political action at its nextannual meeting. If so, it will join as many as 60 major companies,including Wells Fargo, CVS Caremark, 3M and State Street, that arebeing confronted by shareholders over corporate politicalactivities, says Bruce Freed, president of the Washington, D.C.,Center for Political Accountability, which is monitoring andhelping to organize such actions.

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“Target has become the poster child of the Citizens Unitedcase,” says Freed, referring to the Supreme Court's landmark 5-4decision last January that gave corporations the right to fundindependent advertising in political races. “It shows the risksthat a company faces when it gets involved in politics.”

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Target insists it supported Emmer (who at the end of Novemberwas narrowly behind in a vote recount) for his position on economicdevelopment issues, not his position on gays.

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The Center for Political Accountability's research shows that asof Dec. 1, 42 companies could face proxy votes on political actiontransparency at their coming annual meetings, Freed says. Theresolutions generally require that a company post all politicalcontributions on its Web site and establish clear guidelines forhow the board decides on a political contribution. Another 20companies plan to discuss the issue of political transparency andpolitical actions at their annual meetings.

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Boards often avoid proxy votes by negotiating some compromisewith dissident shareholders, usually activist institutionalinvestors such as pension funds, religious orders and sociallyresponsible investment funds. But when there have been proxy voteson the issue of corporate political action, those opposed tosecrecy and management freedom of action have been gainingground.

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Seven years ago, the average vote for proxy measures calling forpolitical transparency was 9%. Last year, it was 30%, and at thelast annual meeting of Unisys, a motion on political transparencygarnered 51% of the votes.

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The Conference Board, a leading business organization, hasweighed in, working with the Center for Political Accountability todevelop a Handbook on Corporate Political Activity,released in November, which sets out best practices in this area.The handbook calls for transparency, an approach that Freed sayswould go a long way toward eliminating the hundreds of millions ofdollars that corporations contributed to national politicalcampaigns this past election cycle.

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The Center for Political Accountability plans to release a newPolitical Accountability Index next year ranking S&P 100companies on their openness about political actions, and it willexpand the index in 2012 to cover the S&P 500. As the focus oncorporate political actions increases, more companies that areexpanding their funding of political campaigns may start findingthemselves becoming targets of shareholder activism.

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