Huntington Ingalls Industries | Lobbying Expenditures Disclosure at Huntington Ingalls Industries

Status
AGM passed
AGM date
Previous AGM date
Resolution details
Lead filer
Individual
Resolution ask
Report on or disclose
ESG theme
  • Governance
ESG sub-theme
  • Lobbying / political engagement
Type of vote
Shareholder proposal
Filer type
Shareholder
Company HQ country
United States
Resolved clause
RESOLVED, the stockholders of Huntington Ingalls Industries (“HII”) request the preparation of a report, updated annually, disclosing:
1. Company policy and procedures governing lobbying, both direct and indirect, and grassroots lobbying communications.
2. Payments by HII 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. HII’ membership in and payments to any tax-exempt organization that writes and endorses model legislation.
4. Description of management’s and the Board’s decision-making process and oversight for making payments described in sections 2 and 3 above.
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 a trade association or other organization of which HII 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 Governance and Policy Committee and posted on HII’s website.
Supporting statement
SUPPORTING STATEMENT
Full disclosure of HII’s lobbying activities and expenditures is needed to assess whether HII lobbying is consistent with its expressed goals and in stockholder interests. HII spent $57,615,041 from 2011 – 2021 on federal lobbying. This does not include state lobbying expenditures, where HII also lobbies but disclosure is uneven or absent. HII’s lobbying ahead of a recent annual defense budget bill has drawn scrutiny,1 and its 2020 federal lobbying put it in the top ten for federal contractor lobbying.2
Companies can give unlimited amounts to third party groups that spend millions on lobbying and undisclosed grassroots activity.3 HII does not disclose its payments to, trade associations and social welfare groups (SWGs), or the amounts used for lobbying. HII belongs to the Business Roundtable (BRT) and sits on the board of the National Association of Manufacturers (NAM), which together have spent over $600 million on federal lobbying since 1998. HII’s disclosure omits trade association memberships in the Association for Unmanned Vehicles and Virginia Chamber and leaves out all SWGs.
HII’s lack of disclosure presents reputational risks when its lobbying contradicts company public positions. For example, our company notes “congressional actions to reduce the federal debt and resulting pressures on federal spending could adversely affect the total funding of individual contracts” as a business risk in its 2022 annual report, while the BRT and NAM lobbied against raising corporate taxes.4 And while HII does not belong to the controversial American Legislative Exchange Council, which is attacking “woke” investing,5 it was represented by NAM, which previously sat on its Private Enterprise Advisory Council.6
Reputational damage stemming from these misalignments could harm stockholder value. HII should expand its lobbying disclosure
1 https://www.opensecrets.org/news/2023/10/defense-contractors-spent-70-million-lobbying-ahead-of-annual-defense-budget-bill-ndaa/. 
2 https://www.politico.com/newsletters/morning-defense/2021/01/29/defense-lobby-spending-totals-for-2020-793059. 
3 https://theintercept.com/2019/08/06/business-group-spending-on-lobbying-in-washington-is-at-least-double-whats-publicly-reported/. 
4 https://www.washingtonpost.com/us-policy/2021/08/31/business-lobbying-democrats-reconciliation/; https://www.washingtonpost.com/politics/2021/09/29/lobbyists-battle-over-democrats-35-trillion-budget-plan/. 
5 https://www.wbur.org/hereandnow/2023/03/22/esg-investing-fossil-fuels. 
6 https://www.exposedbycmd.org/2023/02/03/alec-expands-private-board-of-directors-with-woke-capitalism-fighters/.

Filed by John Chevedden

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