Risk & Governance Weekly

The CtW Investment Group is urging shareholders to support a proposal by the Brethren Benefit Trust that asks the company to disclose its political contributions. In an April 24 letter to investors, CtW argues that the proposal could help prevent future allegations that CVS employees bribed government officials. In March, two former CVS executives--John Kramer and Carlos Ortiz--were arraigned for a second time on federal charges that they bribed Rhode Island lawmakers. The Woonsocket, R.I.-based pharmacy chain opposes the resolution and warns that greater disclosure of its political contributions could help opponents of company interests.

Management has failed to implement a proposal requesting a majority vote standard for director elections that received 66.4 percent support last year. A similar resolution is not on the ballot at the Southfield, Mich.-based auto parts maker, but shareholder John Chevedden is asking the board to eliminate the two-thirds supermajority requirement for actions such as changing board size and removing directors. The company opposes Chevedden’s proposal, saying that dissident shareholders could take control of the board with little advance notice if the voting requirement for these actions was reduced to 50 percent.

Alberto Sanchez, president and CEO of Spanish Bank Santander Central Hispaño’s securities division, is up for re-election to Sovereign’s board. Sanchez serves on the nominating committee, and though the Philadelphia-based Sovereign claims he is an independent director by New York Stock Exchange standards, Sovereign is still party to a number of transactions with Santander, including a consulting contract worth more than $10,000 annually. In 2005, Sovereign structured several transactions with Santander to avoid having to seek shareholder approval. Sovereign barely averted a 2006 proxy contest by naming two dissident investor nominees to the board.