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« Jane Goodall talks birds to humans in Hopkinton | Today | Bunnell trial: Spilled milk and yogurt, then a beating » May 7, 2008CVS shareholders reject executive pay proposal
Generally, a "gross up" payment is given to an executive as the result of the award of a bonus or other such distribution. The executive receives not just the bonus, but also an additional amount -- the "gross up" amount -- to cover the taxes due on the bonus. The American Federation of State, County and Municipal Employees (AFSCME) opposes such payments and has submitted shareholder proposals to a number of companies, including Woonsocket-based CVS Caremark, seeking to restrict "gross up" awards. "We support compensation programs that tie pay closely to performance and that deploy company resources efficiently," the AFSCME proposal stated. "In our view, tax gross-ups for senior executives . . . are not consistent with these principles." CVS' board of directors opposed the change, stating its reasons in the proxy sent to shareholders before the meeting. The company does not provide gross-up awards to cover an executive's income tax payments but provides them on a "case-by-case" basis. "Tax gross-ups are used to address limited situations where the compensation intended for an executive might be unavoidably impacted by tax rules," the proxy states. "In these situations, tax gross-ups are often the only effective way to proved the intended benefit to an executive without paying the executive too much or too little." The proposal failed to get a majority of shares voted this morning, with 48.1 percent of the shares voted in favor and 43.9 percent voted against. Another 7.9 percent abstained. -- Journal staff writer Paul Grimaldi Posted by Jack Perry CommentsBen Adams | May 8, 2008 1:08 PM link Post a commentPlease be civil. Vicious comments, personal attacks and profanity won't be published. Name and email are required; email address will not publish. |
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ProJo 9 to 5 News Blog
Oct 2005 - March 2006
Your headline is misleading. According to voting results, shareholders favored ending tax gross up payments by 48% to 44% with 8% abstaining. While the arcane anti-shareholder rules of the SEC allow for the company to claim the proposal failed, more shareholders voted for the proposal than against it. The news here is that more shareholders supported the measure than opposed it. Paul Grimaldi needs to do a better job at counting votes and understanding the displeasure shareholders have about paying the taxes on perks for CVS-Caremark executives.