Corporate Governance - Business Policies

Running for Office or Engaging in Activities in Support of a Candidate

Notification is Required In Order to Run for Public Office or to Engage in Political Campaign Activities on Behalf of a Candidate in an Election

Employees of PHI are encouraged to be civic minded and to be community volunteers. Community involvement, however, could include political activities such as an employee becoming a candidate for public office or working on another person's behalf in a campaign for public office. Employees must be mindful that ethical and legal compliance requirements could come into play as a result of such activities.

PHI has established a notification procedure for employees who wish to seek public office while holding a position with PHI or any of its subsidiaries. In addition, PHI has established procedures for employees to follow when engaging in political activities in support of a candidate for public office. These procedures apply to federal, state and local elections. The purpose of the Notification procedure is to ensure that PHI complies with all applicable campaign finance laws and avoids even the appearance of endorsing a particular candidate. 

This policy provides notice to employees of PHI's pre-clearance requirements for such activities, as well as general information about the legal restrictions imposed by certain corporate contribution laws and the potential application of federal, state, or local conflict of interest laws. Please contact Senior Vice President of Government Affairs and Public Policy with any questions.

Prior to seeking public office or engaging in political activities on behalf of a candidate, an employee must first notify and consult with Government Affairs and Public Policy regarding any potential conflict or ethical or legal implications. Employees who wish to run for or accept an elected or appointed public office must also complete a form providing information about the office to allow for conflict of interest check and review for ethical or legal implications. 

I.   Notification Policy
Because of corporate contribution restrictions, conflict of interest laws, and other applicable laws are different in each jurisdiction and can be difficult to understand or apply to a specific case, employees are required to notify and receive pre-clearance in writing prior to (i) running for or accepting public office (elected or appointed), or (ii) engaging in political campaign activities (including, but not limited to, fundraising for a candidate for public office or working on a candidate's campaign). The Notification must be made in writing and submitted to the employee's supervisor and the Senior Vice President of Government Affairs and Public Policy, all of whom must sign the request in order to confirm the pre-clearing for the employee to proceed.

II.    Corporate Contribution Restrictions
Federal law and the laws of many states prohibit corporations from making political contributions. Prohibited contributions include both monetary contributions and "in-kind" contributions, such as the company's payment for services, or the use of corporate facilities, resources or personnel, to benefit a candidate or political party committee.

Thus, the following restrictions apply to employees of PHI and its subsidiaries.

A.   Restrictions on Use of Paid Time
If PHI, or a subsidiary, compensates an employee or provides benefits for time spent on a political campaign; the compensated time constitutes a prohibited in-kind contribution. Accordingly,

  1. If an employee is paid on an hourly basis, the employee is prohibited from working on any matter relating to a political campaign during compensated hours. A salaried employee is prohibited from spending time on a political campaign which results in a diminution of services to PHI or its subsidiaries. 
  2. An employee is prohibited from taking a paid leave of absence to work on a political campaign. An employee may use earned vacation time for political campaign activity. 
  3. If an employee takes an unpaid leave of absence to work on a political campaign, PHI or a subsidiary cannot pay health insurance or other benefits for such employee during such leave. Thus, an employee will be required to reimburse PHI or its subsidiary the full cost of all benefits including health insurance while away on the unpaid leave and either reimburse or forego other benefits.
  4. If an employee is elected to a political position that requires a leave of absence during compensated hours, company paid benefits must be reimbursed during that leave time.

B.   Restrictions on Use of Corporate Resources

  1. An employee of PHI or a PHI subsidiary who runs for or holds public office is prohibited from using corporate resources, e.g., office space, supplies, computers, copiers, fax machines, postage, and telephones, or services of any employee of PHI or a subsidiary, to benefit his or her own, or any other, political campaign, party, or committee.
  2. An employee of PHI or a PHI subsidiary is prohibited from using the corporate resources described above, or other facilities or vehicles of PHI or its subsidiaries to benefit any political campaign, party, or committee. 
  3. An employee of PHI or a PHI subsidiary is prohibited from using any personnel of PHI or any PHI subsidiary to perform duties to benefit a political campaign, party, or committee.

III.   Conflict of Interest Laws
If an employee seeks to run for election to public office or accepts an appointed office, the employee may be subject to conflict of interest laws under applicable federal, state or local laws. For instance, such laws, depending upon the jurisdiction, may restrict the ability of PHI or its subsidiaries from lobbying or doing business with the specific governmental entity within which the employee holds office, or even with the entire jurisdiction. In addition, such laws may restrict an employee's involvement regarding governmental matters involving PHI or its subsidiaries. Some jurisdictions also prohibit PHI from paying a public official for any time that official spends performing a governmental function. For this reason, an analysis of applicable conflict of interest laws will be part of the Notification a pre-clearance process for any employee who wishes to seek or hold an elected or appointed public position.

IV.   Other Restrictions
Certain restrictions may apply to the PHI PAC in the jurisdictions listed above, in particular New Jersey.

The State of Maryland requires a semi-annual filing of contributions made by the executives of PHI and its subsidiaries.
V.    "Pay-to-Play" Laws
Certain states and localities have special laws that prohibit companies, such as PHI and its subsidiaries, from having government contracts if a covered employee (and in some cases even a spouse or child of the employee) makes or solicits political contributions in that jurisdiction.

Thus, if an employee’s position is included in the list below, the employee must obtain approval from the Senior Vice President of Government Affairs and Public Policy prior to making or soliciting political contributions at the state or local level, including contributions to political parties or political action committees, or to a state or local official running for federal office in that jurisdiction. The covered positions are:

  • Members of the Boards of Directors of PHI, Conectiv Energy, and Pepco Energy Services;
  • Executive officers of PHI, Conectiv Energy, and Pepco Energy Services; and
  • Employees of PHI, Conectiv Energy, and Pepco Energy Services who deal with, or anticipate dealing with, state or local government agencies with regard to governmental contracts or agreements (such as soliciting or negotiating such contracts).

An employee in a covered position must also obtain prior approval for political contributions made or solicited by his or her spouse or dependent child in the jurisdictions listed below (if a state is listed, prior approval is required for both state and local contributions or solicitations; prior approval is also required for contributions or solicitations for state or local officials running for federal office in the listed jurisdictions):

--Colorado*, Connecticut, Illinois, Kentucky, New Jersey**, Pennsylvania, and Rhode Island.

--Los Angeles County Metropolitan Transportation Authority ("LA MTA").

*The Colorado pay-to-play law took effect December 31, 2008. In addition to spouses and children, domestic partners and certain extended family members are covered (such as in-laws, parents and step-parents, grandparents, grandchildren, siblings and step-siblings, aunts and uncles, nieces and nephews, and guardians).

**The New Jersey pay-to-play law covers civil union partners in addition to spouses and children.


(Note: "Pay-to-Play" list last updated in December 2009.)