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May 09, 2012
Political Spending Proposal at CVS Caremark Goes to Vote Tomorrow
    by Robert Kropp

For the sixth year, shareowners will vote on a proposal from Green Century Capital Management, requesting disclosure of direct and indirect political spending by the company.

Can disclosure of political spending increase at a scale that might lessen the impact of money from corporate treasuries in this year's Presidential election campaign? Despite the successful efforts of the Center for Political Accountability (CPA) and its shareowner allies—recently, CPA announced that the number of companies now disclosing their spending activities has reached the milestone of 100—reining in corporate spending to such a degree will probably require regulation from the Securities and Exchange Commission (SEC).

Despite widespread support for a
petition filed with the Commission last year, it has yet to act. And when it might do so remains unclear, because it does not comment on its deliberations until regulations are issued.

Nevertheless, sustainable investors and other shareowner advocates soldier on, filing resolutions that in many cases have gained considerable levels of support. But votes on resolutions are advisory, and corporations do not always act in response to the concerns of their stakeholders.

An example of corporate intransigence is CVS Caremark, where for five years shareowner proposals addressing its political spending activities have averaged 40% support. But according to
Green Century Capital Management, "CVS does not provide comprehensive disclosure of its direct or indirect political spending, including its payments to trade associations and other tax exempt organizations that are used for political purposes."

"CVS shareholders face significant financial and reputational risks as a result of the company's failure to provide comprehensive transparency and disclosure of its political contributions," said Larisa Ruoff, Director of Shareholder Advocacy for Green Century.

CVS is holding its annual general meeting tomorrow, and once again shareowners will vote on a Green Century proposal that the company disclose both direct and indirect political expenditures as well as its policies on the practice. "The Company's Board and its shareholders need complete disclosure to be able to fully evaluate the political use of corporate assets," the resolution states.

Arguing that its voluntary disclosures are sufficient, the company has recommended that shareowners vote against Green Century's proposal.

The company's position stands in contrast to those of other corporations where similar votes in favor of political spending proposals led to improved engagement and the withdrawal of the resolutions this year. Furthermore, as Green Century pointed out, CVS was among the ten companies in the S&P 100 that earned a zero rating for political spending disclosure from the
CPA-Zicklin Index of Corporate Political Disclosure and Accountability, published in October.

"The company's existing disclosure not only fails to provide investors sufficient information but it also significantly lags behind that of similarly sized companies. We believe this low score should be a wake-up call for the company," Ruoff said. "Shareholders have expressed strong support for this proposal at the company’s four prior annual meetings, demonstrating significant investor interest in increased transparency and disclosure. It is time for the company to respond."


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