Intel's financing of anti-diversity politicians and climate change deniers is 'a risk to the company' | PCGamesN

Intel's financing of anti-diversity politicians and climate change deniers is 'a risk to the company'

Intel HQ logo

Shareholders are questioning the impact on Intel stock of the extreme dissonance between the values the company upholds and the values some of the politicians it funds publicly and professionally promotes. Northstar Asset Management hold near 80,000 shares, totaling around $4 million of Intel stock, and is looking for answers from the chip giant.

Intel held its 2018 annual shareholders meeting last week, in which three proposals were voted on by a grand total of 4.7 billion outstanding shares. One of these proposals recommends Intel justifies its political spending, which some shareholders believe don’t match up with Intel’s company values regarding diversity, climate change, and discrimination.

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Intel has a reputation for being vocal advocates for diversity, even dedicating a large sum of money - $300 million, to be precise - towards this mission back in 2015. Since that time, underrepresented minority employees in leadership positions has increased by 27%, and Intel has moved its goal for full representation within the company by 2020 to instead reach this milestone by 2018.

While there’s always more to be done to benefit inclusionary policies and equality - Intel’s US workforce is still overwhelmingly made up of men from non-underrepresented backgrounds - Intel’s stats indicate a trend towards greater diversity and inclusion.

Intel contributes internally to diversity programs spearheaded by chief diversity and inclusion officer, Barbara Whye. But it also make efforts outside of the company through initiatives such as the supplier diversity investment program, which aims to spend $1 billion by 2020 with suppliers that support Intel’s goals in diversity, sustainability, and education, as well as provide internships for underrepresented minorities.

Intel US employees diversity chart

For some shareholders, however, this corporate ethos of inclusion and diversity doesn’t quite match up with donations to politicians made by the Intel Political Action Committee, or IPAC for short.

IPAC was created back in the ‘80s to fund candidates for public office “whose legislative goals align with Intel’s public policy priorities” as outlined by Intel’s accountability document. This committee utilises voluntary donations from Intel’s employees and directors to fund various political groups and support key policy issues. For the record, corporate funds from Intel are strictly forbidden.

For example, according to proposal six outlined at Intel’s stockholders’ meeting, IPAC contributions from 2015 to 2017 include 15 members of US Congress that voted against the Employment Non-Discrimination Act, which prevents discrimination in hiring based on gender identity or sexual orientation. Other contributions, outlined by NorthStar, include 20 members of US Congress that voted against an amendment to the Justice for Victims of Trafficking act, and 51 members of US Congress that have been identified as climate change deniers.

That includes senator Ted Cruz, who has received $3,150 in total from IPAC since 2012. You know the guy, he ran for the presidential ticket for the GOP, and once said global warming was simply “liberal politicians who want government power over the economy, the energy sector, and every aspect of our lives.”

Intel solar parking structures, Arizona campus

Something doesn’t add up. Intel vocally supports the US reentry into the Paris Climate Change Agreement, as-per-policy and its corporate responsibility report tells largely the same story. This same company policy directly outlines the threats of climate change, yet Intel’s PAC donations have been actively funding some politicians identified as refusing to acknowledge its existence. However, NorthStar Asset Management wants to open these political donations to discussion.

NorthStar Assets Management is a “socially-responsible” investment firm based in Boston, who focus on shareholder engagement, targeted giving, and challenging income equality and the wealth gap. It also holds 79,040 stocks in Intel, which equates to over $4 million in value. That puts the company in a rather interesting position as advocates for change, yet also with a substantial vested interest in the continued success of Intel.

Despite its shared financial interests, NorthStar doesn’t pull any punches when it comes to its shareholder activism and upholding its beliefs. The firm put forward proposal six at the shareholders’ meeting, which aimed to incite a vote on a cost-benefit analysis report into Intel’s PAC contributions. The firm tried a similar resolution back in 2017, and has been involved with Intel regarding its political contributions since 2012.

Intel fab floor

“Given the recent controversies regarding misconduct of politicians and around electioneering contributions in general,” the proposal says, “as well as the apparent misalignment between many Intel-directed political contributions and company values and policies, shareholders are concerned that benefit to the company of influencing policymakers through Intel-directed political contributions may not outweigh the risks associated with these contributions.

“Shareholders recommend that the Board of Directors report to shareholders (at reasonable expense, excluding confidential information) a cost-benefit analysis of the most recent election cycle’s political and electioneering contributions by Intel and IPAC, examining the effectiveness, benefits, and risks to shareholder value associated with those contributions.”

The proposal landed on deaf ears, however. Intel’s board of directors recommended that Intel’s shareholders vote against the proposal, and the shareholders listened. Only 7% of shareholders voted in favour of the proposal. The previous year’s proposal to hold an annual advisory vote on political contributions was also rejected by shareholders, as per the recommendation of the board of directors.

NorthStar Asset Management

We spoke with the director of shareholder activism at NorthStar Asset Management, Mari Schwartzer, who outlined proposal six made at the 2018 annual shareholders’ meeting.

“Regarding our shareholder proposal at Intel for this year, we would like Intel management to perform deeper analysis on political contributions made by the company and IPAC, specifically related to how the voting records of those political candidates may pose a risk to the company if and when they are misaligned with the company’s values, goals, and policies.” Schwartzer says. “The end goal is to encourage the company to perform this analysis in order to protect shareholder value from the risks that may come from misaligned political contributions, but also to encourage conversation within the company to evaluate candidates in a more complete, holistic manner.

“It is crucially important that we engage companies on their political contributions to help them understand that by supporting candidates that seek to undo social progress, the company and its employees may suffer.”

Intel CEO Brian Krzanich

Intel has also provided a response to the proposal in support of the board of director’s decision to vote against it.

“We regularly evaluate our political spending for effectiveness and alignment as part of our contributions process. We recognise that it is impractical and unrealistic to expect that our company, stockholders, and stakeholders will agree with every issue that a politician or trade association may support, particularly given our strategy of bipartisan giving. As part of our process, we assess recipients’ overall voting records related to our key policy issues and make funding decisions that we believe in aggregate will have the greatest benefit for our stockholders and key stakeholders.”

Intel’s political donations are no secret. The company works with a high degree of transparency - evident by the database of candidates supported by Intel’s PAC. The company’s spending is also evidently bipartisan throughout, with around 90 Democrat candidates receiving funding, and around 85 Republicans in 2018. Contributions also vary between both supporters and naysayers on many of the issues outlined in the proposal.

For NorthStar, however, the buck doesn’t end with transparency. The firm isn’t convinced Intel’s current course of action is accomplishing enough to combat what NorthStar refers to as ‘misaligned’ contributions.

Intel headquarters

“We find Intel’s response to the proposal to be insufficient,” Schwartzer says. “While Intel provides disclosure on its political contributions, simply disclosing contributions may not protect shareholder value, nor does it demonstrate comprehensive research in advance of these contributions.

"We have engaged with Intel since 2012 regarding political contributions and what we view as issues with misalignment with company values and policies; however, we see no evidence that the company has taken steps to consider candidates’ voting records or public stances on issues like women’s rights, LGBT rights, or climate change.”

We have also spoken with representatives from Intel itself and the company is still standing by its initial response to the proposal, despite NorthStar finding that 'insufficient.'

It’s not the legality of these political contributions being brought into question, however, it’s whether these political relations could clash with Intel’s vocal stances on social issues, equality, and the environment, and could also damage the company’s socially-positive reputation.

In that regard, there is an obvious dichotomy of views between what Intel as a company holds dear and what IPAC determines is worthwhile, and net positive overall, when making contributions. Whether this funding has any effect on Intel’s reputation, however, is really up to many of you - Intel’s customers.

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TsunamiWombat avatarZeroderp avatarJacob Ridley avatarpanbient avatarSmaugTheDragon avatarDave James avatar+2
Zeroderp Avatar
59
4 Weeks ago

Becarful with these kinds of articles. It will bring some political discourse to the comments.

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panbient Avatar
269
4 Weeks ago

Kudos for trying something new and substantial. However the details kind of get lost in the shuffle. I don't see how this is a risk to Intel, what I'm reading is an investor who wants more control for their minimal investment (a whole $4 million out of $170 billion according to Forbes).

Ultimately, I don't see Intel's relatively tiny political contributions to be of any real concern. That blurb about the contribution to Ted Cruz is laughable unless there's a typo in that number. $3150 over 6 years isn't enough to get a plate of food at a typical fund raising dinner. What Intel seems to be doing is maximizing minimum contributions while playing both sides of the field so they end up being seen as supporting whatever side wins political power without investing enough to establish any sort of leverage. Now if there was evidence of major favourtism towards certain politicians or initiative through more substantial contributions or donations there might be something to be concerned about.

But this just seems to be Northstar making noise to get some free press by picking on a tech giant because they're not as socially righteous as some would like.

Ultimately I don't think many of Intel's customers are going to be concerned with relatively tiny bipartisan political contributions. Personally I'd be far more concerned if Intel really started paying attention to political claims rather than blindly (relatively) contributing to both sides.

1
Jacob Ridley Avatar
41
4 Weeks ago

In the end, it's a question of perceptions. If you perceive these donations to be harmless to Intel's reputation, then that's good news for Intel and their shareholders.

NorthStar put forward the proposal for this exact purpose, to measure up whether the benefit outweighs the potential risk and if more should be done to manage these risks. That doesn't preclude a conclusion that there is a net benefit to these contributions and no major risk to reputation - but it's a question worth asking.

2
SmaugTheDragon Avatar
11
4 Weeks ago

The employment statistics are actually far above average considering the sad situation of systems level comp sci and mathematics graduates.

1
Dave James Avatar
626
3 Weeks ago

Definitely, the efforts Intel has been putting in does show that, as a company, it is trying. Which is also what puts the political funding wing into stark relief.

1
WhiteCrow Avatar
697
3 Weeks ago

Fantastic writeup. Definitely interesting, and I wouldn't mind seeing more of this kind of thing peppered in with gaming news.

1
Jacob Ridley Avatar
41
3 Weeks ago

Thanks, glad you found it interesting!

2
MadMarchHare Avatar
51
3 Weeks ago

No company should be "donating" anything to political entities period. How is it anything other than paying for prospective preferential treatment. Mind you if they didn't do it out in the open it would still just go on behind closed doors in brown envelopes. Moral of the story they all shady fuckers whichever way you want to look at it.

1
TsunamiWombat Avatar
752
4 Weeks ago

Hypocrisy is the name of the game in business and politics, it's why they get on so well together. Interesting stuff - though really, 3k? That's not a drop in the bucket for the kind of money these politicians get from Superpacs.

0
Jacob Ridley Avatar
41
4 Weeks ago

It's not so much a question of how much, but why. Contributions range from sub-$1,000 to $10,000 individually - occasionally more. In the grand scheme of things, it's not a huge sum of money per candidate each year, but in total these donations amounted to roughly $1 million spent by IPAC in 2016.

The real risk for Intel is how its contributions, and the intention behind its contributions, are perceived.

2