Director Roger Headrick retired from CVS/Caremark’s board after a labor pension fund called for his ouster and complained that he would not been elected without the help of undirected "broker" votes.

The drugstore company reported that Headrick received 56 percent support in early May, but the CtW Investment Group, the investment arm of the Change to Win labor federation, argued that he would have failed to get majority support had broker votes not been counted. CtW targeted Headrick and another former Caremark Rx director over their role in approving a $27.2 billion sale to CVS earlier this year. Headrick, who chaired the company's audit committee, also was criticized over past stock option grants at Caremark.

The close vote at CVS/Caremark was particularly noteworthy, because the Rhode Island-based company recently adopted a bylaw that requires board candidates to receive majority support in uncontested elections.

CVS/Caremark did not address the reasons for Headrick's retirement in a July 2 regulatory filing, but Chairman Mac Crawford said Headrick "helped guide Caremark through a series of large and successful transactions that rewarded Caremark shareholders…" Headrick told Bloomberg News that the investor complaints were not a factor in his decision to step down. "I have a lot of other things to do that I’m involved in and want to pursue," he said.

In a July 3 press release, CtW said, "CVS/Caremark shareholders succeeded in removing embattled director Roger Headrick [and] ... holding him accountable for his past failures to protect Caremark shareholders." The labor fund noted that its campaign was aided by communications from the California Public Employees' Retirement System, New York City's comptroller, and North Carolina's state treasurer.

In addition, the vote at CVS/Caremark has been cited by CtW, the Council of Institutional Investors (CII), and other investor groups that are lobbying for a New York Stock Exchange (NYSE) proposal to bar broker votes from board elections. CII and CtW contend that broker votes are routinely cast for management nominees and thus undermine the integrity of director elections. Corporate advocates point out that some small and mid-size companies need to count broker votes so they can meet quorum requirements. The proposed NYSE rule is now under consideration by the Securities and Exchange Commission.