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Majority Voting for Directors
CII's corporate governance policies state that in uncontested elections, directors should be elected by majority vote; directors who fail to receive majority support should step down from the board and not be reappointed.
Majority voting ensures that shareowners’ votes count and makes directors more accountable to the shareowners they represent.
While the vast majority of companies in the S&P 500 use the majority vote standard for uncontested director elections, thousands of U.S. companies still use the plurality vote standard. Even some companies that have embraced majority voting for directors grant boards discretion to overrule shareowners and reappoint incumbent directors who fall short of majority support in uncontested elections.
Problem with plurality voting: With plurality voting, the nominee who receives the most "for" votes for a board seat wins. This means that in an uncontested election, a nominee will be elected even if he receives just one "for" vote. Plurality voting in uncontested elections results in "rubber stamp" elections, entrenched boards and, occasionally, directors who lack the confidence of most of the shareowners.
Make majority voting a listing standard: On June 20, 2013, CII petitioned NYSE Euronext and the Nasdaq Stock Market to require listed companies to (1) elect directors by majority vote when there is not a contest for board seats and (2) not reappoint directors who fall short. Many CII members and other market participants endorsed CII's petitions, including: members of the CII Advisory Council (NYSE, Nasdaq), the California State Teachers' Retirement System (NYSE, Nasdaq), the Florida State Board of Administration (NYSE, Nasdaq), Hermes Equity Ownership Services (NYSE, Nasdaq) and the UAW Retiree Medical Benefits Trust (NYSE, Nasdaq).
Resources & Advocacy
CII corporate governance policy on majority voting for directors
CII annual letter-writing campaign urging boards not to reappoint "zombie" directors (members only)
CII campaign to make majority voting an exchange listing standard (see above and June 20, 2013, letters below)