CVS Health 2023. Fair Elections is just one of several issues to be voted on before the annual meeting at 5:00 am Pacific on May 18, 2023. Vote Against Brown, Farah, Finucane, Million, auditor, pay, proposal #9; FOR shareholder proposals #5, #6, #7, #8. Join the meeting with your control number.
CVS Health Corporation provides health services in the United States. It operates through Health Care Benefits, Pharmacy Services, and Retail/LTC segments. I voted with the Board’s recommendations 47% of the time. View Proxy Statement via SEC’s EDGAR system (look for DEF 14A). Read Warnings. Good corporate governance generally results in better profits and a better society. However, I don’t prioritize profits over our natural environment and human needs, especially when companies externalize costs. (see The Shareholder Commons)
CVS Health 2023: ISS Rating
CVS Health Corporation’s ISS Governance QualityScore as of May 1, 2023, is 5. The pillar scores are Audit: 6; Board: 5; Shareholder Rights: 7; Compensation: 4. Corporate governance scores courtesy of Institutional Shareholder Services (ISS). Scores indicate decile rank relative to index or region. A decile score of 1 indicates lower governance risk, while a 10 indicates higher governance risk.
CVS Health 2023: How I Voted
| Item | Egan-Jones Recommendation | CorpGov.net Vote |
|---|---|---|
| 1A-1K – Election of Directors | FOR, WITH EXCEPTION OF 1C) DAVID C. BROWN II, 1F) ROGER N. FARAH, 1G) ANNE M. FINUCANE, and 1J) JEAN PIERRE MILLON | Vote Against Brown, Farah, Finucane, Million |
| 2 – Ratification of Independent Auditor | AGAINST | AGAINST |
| 3 – Approve Pay | AGAINST | AGAINST |
| 4 – Frequency of Future Advisory Votes on Executive Compensation | 1 YEAR | 1 YEAR |
| 5 – Shareholder Proposal: Paid Sick Leave for All Employees | AGAINST | FOR |
| 6 – Shareholder Proposal: Reducing the Ownership Threshold to Request a Special Stockholder Meeting | FOR | FOR |
| 7 – Shareholder Proposal: “Fair Elections” re By-law Amendments | FOR | FOR |
| 8 – Shareholder Proposal: Report on a “Worker Rights Assessment” | FOR | FOR |
| 9 – Shareholder Proposal: Prevent Company Directors from Simultaneously Sitting on the Boards of Directors of Any Other Company | AGAINST | AGAINST |
CVS Health 2023 Votes Explained
E-J recommended against the pay package as too high, several directors for being on the compensation committee, and others for being over-tenured. iconik agreed on pay and committee members. Pay is more than 200 times the median ($21M compared to $56,00). At least part of the exec pay plan auto-renews. E-J also recommends against auditors that have served longer than 7 years. Ernst & Young has served 16 years so that independence could be compromised.
We also agreed on the shareholder proposals. Of course, I voted for our proposal on Fair Elections, #7. Proposal #9 seeks to focus the attention of directors but is too drastic since it asks that directors be prohibited from serving on any other boards. Some experience at other boards can help gain perspective and can reduce groupthink.
I had help with my voting from Egan-Jones, my own proxy voting policy through Iconikapp. and by briefly looking and some funds that announce their votes in advance. Note: you can automate all your proxies to be voted according to human values by signing up for the iconik/AYS app. In about two minutes, you’ll vote all your proxies according to values that balance environment, social, governance, and profitability. More information at Free Proxy Advisor From As You Sow & Iconikapp. I have a more customized version, so your results with the iconik/AYS app may differ. Now, you can also sign-up for automated voting with iconikapp through Third Act.
CVS Health 2023: My Fair Elections Proposal
This proposal is from Myra Young (my wife), written by me, James McRitchie. In 2002 I petitioned the SEC for proxy access. It took three rulemakings and a court battle. More than 20 years later, 81% of S&P 500 companies, including CVS Health, have something called proxy access. Unfortunately, it requires that nominating groups hold 3% for 3 years AND groups are limited to 20 members.
That sets up a situation where proxy access can’t really be done without one of the Big Four fund families. They administer retirement savings plans for companies and have never even filed a shareholder proposal, let alone challenged directors. Therefore, proxy access has gone unused.
Now, after decades, the SEC adopted Rule 14a-19, allowing shareholders, under specified conditions, to split votes between board nominees and challengers without attending annual meetings. But will the universal proxy rule will go the way of so-called proxy access?
After reading bylaws adopted by Masimo, Bloomberg’s Matt Levine speculated that company bylaws might demand challengers submit disclosures on paper woven from unicorn manes, with requirements waived for the board’s nominees.
We can all agree there should be some limits on what Boards can require without seeking shareholder approval in advance or at least within a year or so of adoption. I filed 30 proposals like the one before you. We reached agreements at about 1/3 of the companies based on guardrails that preserve the rule’s intent.
All shareholder proposals are advisory. Even if we win overwhelmingly, boards are free to ignore them or to adopt whatever they please.
Your vote FOR this proposal can help us reach a similar agreement with CVS Health, either before the next annual meeting or after an even higher vote next year based on a revised proposal that reflects agreements reached with other companies to protect the rights of shareholders, maybe something like our more recent proposal at Procter and Gamble.
Please Vote FOR proposal Number 7.
Other Recommendations
You might want to see how a few funds voted in our Shareowner Action Handbook.
CVS Health 2024: Mark Your Calendar
If you want to submit a proposal for possible inclusion in our proxy statement for the 2024 Annual Meeting of Stockholders, you must ensure your proposal is received by us on or before Saturday, December 9, 2023, and is otherwise in compliance with SEC rules.
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