Political Contributions

Resolution Text

RESOLVED: The shareholders of Vertex Pharmaceuticals Inc. (“Vertex” or “Company”) hereby request the
Company to prepare and semiannually update a report, which shall be presented to the pertinent board
of directors committee and posted on the Company’s website, that discloses the Company’s:

a. Policies and procedures for making electoral contributions and expenditures (direct and indirect) with corporate funds, including the board’s role (if any) in that process; and

b. Monetary and non-monetary contributions or expenditures that could not be deducted as an “ordinary and necessary” business expense under section 162(e)(1)(B) of the Internal Revenue Code, including (but not limited to) contributions or expenditures on behalf of candidates, parties, and committees and entities organized and operating under section 501(c)(4) of the Internal Revenue Code, as well as the portion of any dues or payments made to any tax-exempt organization (such as a trade association) used for an expenditure or contribution that, if made directly by the Company, would not be deductible under section 162(e)(1)(B) of the Internal Revenue Code.

The report shall be made available within 12 months of the annual meeting and identify all recipients and the amount paid to each recipient from Company funds. This proposal does not encompass lobbying spending.

Supporting Statement: As long-term Vertex shareholders, we support transparency and accountability in corporate electoral spending. Disclosure is in the best interest of both the Company and its shareholders. The Supreme Court recognized this in its 2010 Citizens United decision, which said: “[D]isclosure permits citizens and shareholders to react to the speech of corporate entities in a proper way. This transparency enables the electorate to make informed decisions and give proper weight to different speakers and messages.”

Public records show Vertex has contributed more than $3.3 million in corporate funds since the 2010 election cycle.

Vertex discloses a policy on corporate political spending and its direct contributions to candidates, parties, committees, and 527 groups; however, this is only a small part of the overall picture because Vertex does not disclose its:

1. Direct independent expenditures;
2. Payments to trade associations that that can be used for election-related purposes (amounts nondeductible under section 162(e)(1)(B));
3. Payments to any other tax-exempt organizations – such as 501(c)(4)s – that can be used for election-related purposes; and,
4. Payments to influence the outcome of ballot measures.

Information on indirect electoral spending through trade associations and 501(c)(4) groups cannot be obtained by shareholders without Company disclosure. This proposal seeks disclose of all of Vertex’s
electoral spending – both direct and indirect.

This would bring Vertex in line with a growing number of leading peer companies, including: Alexion Pharmaceuticals Inc., Biogen Inc., and Gilead Sciences Inc., each of whom present this information on their websites. Vertex shareholders and the Board need comprehensive disclosure to be able to fully evaluate the use of corporate assets in elections.

THEREFORE: We urge your support FOR this critical governance reform.

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Lead Filer

Bruce Herbert, AIF
Newground Social Investment