CVS Board Axes Director Majority Voting Proposal

May 12, 2006 ( - CVS Corp. shareholders struck down a proposal from a pension fund yesterday that would require board nominees to receive a majority vote, instead of just a plurality.

According to the Providence Journal, part of an effort to make a company’s executives more accountable, The United Brotherhood of Carpenters Pension Fund also introduced the same proposal last month at Textran Inc.’s annual meeting, where the shareholders approved the measure despite management objections. The union saw the same success with Bank of America in April (See Bank of America Shareholders Back Majority Vote System for Directors).

The Journal reported that the CVS proposal fell on a tight vote, with 49% of the shares voted to approve the proposal – enough to keep the matter alive until another meeting later this year, according to Tom Ryan, CVS chairman, president and CEO.

The CVS board opposed the voting-format change, saying in the proxy statement that “In light of our history of electing strong and independent boards, and given the current, uncertain state of play on majority voting for election of directors, we believe that moving to a majority voting election system is unwarranted.”

The Journal reported that the shareholders also rejected another proposal to require the chairman to have no management duties, titles or responsibilities, in an attempt to remove potential conflicts of interest. The proposal states that “When a person acts as both a company’s chairman and CEO a vital separation of power is eliminated.”

The proposal received slightly less than 40% of the 670.3 million shares, according to the Journal.