GENERAL DYNAMICS CORPORATION | Report on lobbying at General Dynamics Corporation

Status
Omitted
Previous AGM date
Resolution details
Company ticker
GD
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 sector
Industrials
Company HQ country
United States
Resolved clause
Shareholders request the preparation of a report, updated annually, disclosing:

Company policy and procedures governing lobbying, both direct and indirect, and grassroots lobbying communications.
Payments by General Dynamics used for (a) direct or indirect lobbying or (b) grassroots lobbying communications, in each case including the amount of the payment and the recipient.
General Dynamics` membership in and payments to any tax-exempt organization that writes and endorses model legislation.
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 General Dynamics 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 Audit Committee and posted on General Dynamics' website.
Supporting statement
Full disclosure of General Dynamics' lobbying activities and expenditures is needed to assess whether its lobbying is consistent with its expressed goals and in shareholders' best interests. General Dynamics spent over $155 million from 2010 — 2023 on federal lobbying. This does not include state lobbying, where General Dynamics also lobbies but disclosure is uneven or absent. General Dynamics' federal lobbying in every quarter for 2023 over research and development tax credits has attracted attention.(1)

Companies can give unlimited amounts to third party groups that spend millions on lobbying and undisclosed grassroots activity.(2) Unlike many of its peers, General Dynamics fails to disclose its memberships in or payments to trade associations and social welfare groups, or the amounts used for lobbying, to shareholders. General Dynamics belongs to the Business Roundtable, which has spent over $405 million on lobbying since 1998, and also to the Aerospace Industries Association, National Defense Industrial Association and Telecommunications Industry Association.

General Dynamics' lack of disclosure presents reputational risks when its lobbying contradicts company public positions. For example, General Dynamics recognizes the importance of addressing climate change, yet the Business Roundtable filed an amicus brief opposing the Securities and Exchange Commission climate risk disclosure rules. (3) And while General Dynamics has drawn attention for lobbying for tax breaks, (4) the Business Roundtable has lobbied against a new minimum corporate tax. (5)

Reputational damage stemming from these misalignments could harm shareowner value. Improved General Dynamics lobbying disclosure will protect the reputation of General Dynamics and preserve shareholder value.



?(1) https://www.defensenews.com/congress/2024/03/04/tax-credit-sought-by-defense-industry-stuck-in-senate-limbo/

(2) https://theintercept.com/2019/08/06/business-group-spending-on-lobbying-in-washington-is-at-least-double-whats-publicly-reported

(3) https://www.eenews.net/articles/investors-question-business-roundtables-climate-rule-battle/

(4) https://www.defensenews.com/congress/2023/07/26/warren-slams-defense-contractors-over-tax-lobbying/

(5) https://www.washingtonpost.com/business/2023/08/14/biden-corporate-tax

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