Sticking to Business in the Boardroom: While politics are always on the radar, taking sides in an election could present business risks.

• Author: Hall, April
• Position: THE AGE OF RISK: Political Risk

Jon Hanson says his first board appointment was likely connected to his politics. Not necessarily because he was a Republican or a Democrat, but because of his relationships. Hanson, the founder and chairman of Hampshire Real Estate Companies, was appointed to the New Jersey Bell (now Verizon) board after serving as finance chairman for Tom Kean's successful campaign for governor in the early 1980s.

"I was there because it was perceived that I was close to the new governor," he says. He was, but he says no board ever took advantage of that relationship during his tenure as a director.

By and large, directors say political discussions aren't appropriate in the boardroom. If anything, there should be a calculation of risks associated with election results, but no one should advocate for one candidate or another.

"I do not remember in the 40 years I've served on corporate boards ever having been part of a boardroom discussion that was, 'We're starting our board meeting. Let's talk. Who's going to be the next president or the next governor?'" says Hanson. "Do you have sidebar conversations? Sure--at lunchtime. It wasn't part of the board agenda."

"I am not seeing discussions in the boardroom around domestic politics except to comment that it is pretty dysfunctional these days and the election is a tossup," says Maggie Wilderotter, who sits on the boards of several public companies, including Costco, Lyft, Chobani, Hewlett-Packard Enterprise and DocuSign.

However, corporations do take positions on politics by contributing to candidates or parties they see as supporting their businesses. Many will hedge their bets and contribute to both sides of the aisle, though not usually in equal amounts.

Wilderotter says some companies use political action committees (PACs) as their vehicle for political donations, and while board members are welcome to also contribute, there is no mandate to do so. She says directors should be able to support candidates individually, even if their favorite is different from the corporation's.

"I do think candidate support and contributions are a personal decision, but I would expect them to be made without fanfare," she says.

Separating key stakeholders' political positions from the company is a fraught issue, says Bruce Freed. He is the founder and president of the Center for Political Accountability (CPA) in Washington, D.C.

Between the 2008 and 2018 election cycles, business PACs accounted for between 68.6% ($310 million...