TheCorporateCounsel.net

July 5, 2007

A Chat with One of the Activist Nuns

For those of you that deal with shareholder proposals, you undoubtedly have heard about the “nuns” that are shareholder activists. A recent Washington Post article prompted me to call upon one of the more active nuns to discuss what led her into this field.

In this podcast, Sister Valerie Heinonen draws upon her experiences from three decades of shareholder activism to give us a perspective on the shareholder proposal process from the proponent’s viewpoint, including:

– How did you get started in the shareholder proposal arena?
– What do you find most challenging about the shareholder proposal process? What do you find the most frustrating?
– If you could change the shareholder proposal process, what would you change?
– In terms of communicating with proponents, what do you recommend to companies that they do?

[Personal Note: My family and I walked in the DC “4th of July” parade yesterday carrying a large 5-point fabric star. Quite a trip marching past thousands and thousands. Next year, we graduate to manning the ropes on a big balloon.]

A Director “Retirement”: Two Tales

Below is a stark example of the differences between why a director really resigns from a board and what a company is willing to disclose about it:

1. Here is a Tuesday press release from the CtW Investment Group:

“Last night, CVS/Caremark shareholders succeeded in removing embattled director Roger Headrick from the company’s board of directors and, in so doing, holding him accountable for his past failures to protect Caremark shareholders. As lead independent director and audit committee chair at Caremark, Mr. Headrick bears principal responsibility for approving a sweetheart deal with CVS that nearly cost shareholders $3.3 billion and for the ongoing DOJ and SEC investigations into possible stock option backdating.

Mr. Headrick’s resignation required extraordinary efforts after the CVS/Caremark board initially failed to respect the shareholder vote in its May 9 director election. In addition to communications from major institutional shareholders—including the California Public Employees’ Retirement System, New York City Comptroller William C. Thompson, Jr. and North Carolina State Treasurer Richard H. Moore—members of the House Committee on Financial Services questioned SEC Chairman Christopher Cox regarding the impact of the broker vote on Mr. Headrick’s tainted election during last Tuesday’s hearing on investor protection and market oversight.

The adoption of majority vote standards in director elections by hundreds of companies, including CVS/Caremark, should finally make director elections meaningful. The extraordinary measures required to remove Mr. Headrick, however, underscore the need for swift SEC approval of the NYSE proposal to eliminate the broker vote in all director elections to ensure their integrity going forward.”

2. Here is CVS/Caremark’s version of the director departure, as disclosed in the company’s Form 8-K:

“CVS Caremark Corporation has announced that Roger L. Headrick has decided to retire from its Board of Directors, effective immediately. The Company also announced that its Board of Directors has designated William H. Joyce to succeed Mr. Headrick as Chairman of its Audit Committee.

‘We are enormously grateful to Roger Headrick for the many years of distinguished service he has provided to Caremark,’ said Mac Crawford, Chairman of the Board of Directors of CVS Caremark Corporation. ‘During his tenure on the Caremark board, Roger helped guide Caremark through a series of large and successful transactions that rewarded Caremark shareholders and transformed our company into the nation’s leading pharmacy services provider. He will be greatly missed by me and his fellow directors of CVS Caremark.’

‘We thank Roger Headrick for his service to CVS Caremark and will miss his wise counsel and stewardship,” added Tom Ryan, President and Chief Executive Officer of CVS Caremark. “We wish him well in his retirement. We are also grateful to Bill Joyce for agreeing to succeed Roger as Chairman of our Audit Committee.’”

Survey Results: Blogging Anniversary

With five years of blogging under my belt (and now, a new partner-in-crime), I asked a few questions last month about how you might want to see the direction of this blog change. Here are the results:

1. I have been reading Broc’s blog since:

– Way back when Broc was blogging on RealCorporateLawyer.com (ie. 2002) – 41.5%
– For two-three years – 38.5%
– Just the past year – 20.0%

2. If I had my druthers, Broc would:

– Never mention his personal life again – 6.6%
– Mention his personal life occasionally, just as he does now – 83.8%
– Blog more about his personal life (because it makes my life appear so much better in comparison) – 9.6%

3. On TheCorporateCounsel.net, I wish Broc would do more of these types of podcasts:

– More podcasts about offering techniques – 34.7%
– More podcasts about governance practices – 64.5%
– More podcasts about disclosure analysis – 69.4%
– More podcasts about latest legal developments – 62.9%
– More podcasts of a human interest nature – 8.1%

Thanks for the feedback; Dave and I will heed your wishes about podcast topics – and letting our personal lives only occasionally pop up in our daily musings…

– Broc Romanek