LOS ANGELES, May 16 (Reuters) - CVS/Caremark Corp. CVS.N shareholders have voted in favor of permanently separating the roles of chairman and chief executive, the drugstore and pharmacy chain said in a regulatory filing on Wednesday.
The vote is nonbinding, but CVS said it would “review this matter fully and give careful consideration to an appropriate response.” The company currently has a separate chairman and CEO, but is not required to in the corporate bylaws or charter.
Over 418 million votes were cast in in favor of separating the posts, while about 375 million were opposed.
CVS said investors at its annual meeting May 9 shot down another shareholder proposal to beef up the company’s policy on stock option grants.
Results were released in a filing with the U.S. Securities and Exchange Commission.
The company’s proxy had included a proposal by a Standard & Poor’s 500 index fund that the company adopt a strong policy against options backdating, including requesting the resignation of any executive or director found to have accepted backdated options or who approved an award of backdated options to others.
The fund said that the company’s current policy fell short of what was needed.
Last year, before its acquisition by CVS, Caremark disclosed that U.S. authorities were investigating it over possible options backdating. The company later said it had properly awarded those stock options.
The vote, however, was close. Over 340 million votes were cast in favor of the proposal, while nearly 363 million were opposed.
The individual shareholder proposal to separate the CEO and chairman roles was intended to provide independent oversight of management. According to the proxy proposal, the independent investment research firm Corporate Library gave the company a “D” grade in corporate governance, and cited “very high concern” over its CEO compensation.
CVS, which defended what it called its “strong corporate governance record,” argued that the company needed to retain flexibility and said that its policy of regular executive sessions of nonmanagement directors helped maintain the independence and oversight of management.
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