Thursday, June 14, 2007

CtW Rocks the Capital Strategies

'Broker Votes': Opponents May Win One

NYSE and SEC Look To Rein In the Practice; Criticizing CVS Election
By KARA SCANNELL
Wall Street Journal

Investors who are growing increasingly vocal about the performance of executives and directors may soon get a boost, as the role of shareholder votes cast by brokers comes under closer scrutiny.

In routine matters at annual meetings, such as the election of uncontested directors, shares not voted by shareholders can instead be voted by the brokers who hold those shares, any way they want. That's created controversy in some votes recently, and has gained the attention of regulators, some of which are pushing for a change.

This question arose most recently in the case of Minnesota businessman Roger Headrick, who was re-elected to the board of CVS Caremark Corp. last month after receiving 606 million votes, or 57.2% of the total cast. CtW Investment Group, an arm of Change to Win, a coalition of labor unions, says the contest was swung by 264 million "phantom" votes cast by brokers who hadn't received specific instructions from their clients.

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