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CVS » Topics » Special Shareholder Meetings

This excerpt taken from the CVS DEF 14A filed Mar 28, 2008.

“Special Shareholder Meetings

RESOLVED, Special Shareholder Meetings, Shareholders ask our board to amend our bylaws and any other appropriate governing documents in order that there is no restriction on the shareholder right to call a special meeting, compared to the standard allowed by applicable law on calling a special meeting.

Special meetings allow investors to vote on important matters, such as a takeover offer, that can arise between annual meetings. If shareholders cannot call special meetings, management may become insulated and investor returns may suffer.

Shareholders should have the ability to call a special meeting when they think a matter is sufficiently important to merit expeditious consideration. Shareholder control over timing is especially important regarding a major acquisition or restructuring, when events unfold quickly and issues may become moot by the next annual meeting.

Fidelity and Vanguard support a shareholder right to call a special meeting. The proxy voting guidelines of many public employee pension funds, including the New York City Employees Retirement System, also favor this right.

Eighteen (18) proposals on this topic averaged 56%-support in 2007 – including 74%-support at Honeywell (HON) according to RiskMetrics (formerly Institutional Shareholder Services).

The merits of this proposal should also be considered in the context of our company’s overall corporate governance structure and individual director performance. For instance in 2007 the following structure and performance issues were reported:

  n The Corporate Library http://www.thecorporatelibrary.com, an independent investment research firm, rated our company:

“D” in Corporate Governance.

“Very High Concern” in executive pay.

“High Overall Governance Risk Assessment”

 

  n We had no Independent Chairman – Independent oversight concern.
  n Two directors had non-director links with our company – Independence concern:

Mr. Piccolo

Ms. Williams

  n Two of our directors held 5 directorships – Over-commitment concern:

Mr. Swift

Ms. Rosenberg

  n No shareholder right to:

1) Cumulative voting.

2) Act by written consent.

3) Call a special meeting.

 

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Additionally:

  n Three directors were designated as “Problem Directors” due to their involvement with the FleetBoston board, which approved a major round of executive rewards even as the company was under investigation by regulators for multiple instances of improper activity:

Mr. Ryan

Mr. Murray

Ms. Heard

 

  n Ms. Heard received 32% withhold votes at our 2007 annual meeting yet served on 2 of our key board committees.
  n Mr. Headrick (no longer on our board) received a 42% withhold votes in 2007 amid criticism over his role as a Caremark director in approving the sale to CVS.
  n Plus these directors served on the following boards rated D by The Corporate Library
1) Mr. Ryan    Bank of America (BAC)     
2) Ms. Rosenberg    Avis Budget (CAR)     
3) Mr. Swift    Ingersoll-Rand (CEM)     
4) Mr. Piccolo    Chemtura Corp. (CEM)     
5) Mr. Dorman    Motorola (MOT)     

The above concerns shows [sic] there is room for improvement and reinforces the reason to take one step forward now and encourage our board to respond positively to this proposal:

"Special Shareholder Meetings" elsewhere:

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