At most U.S. public companies, directors are elected by a plurality−rather than a majority−of the votes cast. Under plurality voting, shareholders have two choices:a director is elected to the board by virtue of having received the most votes; in an uncontested election, a single vote “for” a nominee is enough for him or her to win a board seat.
CII believes that majority voting ensures that shareowners’ votes count and makes directors more accountable to the shareowners they represent. Plurality voting in uncontested elections results in "rubber stamp" elections.
While more than 70 percent of companies in the Standard & Poor’s 500 Index use the majority vote standard for uncontested board elections, thousands of U.S. companies still use plurality voting. And even some companies that have embraced majority voting for directors give their boards discretion to overrule shareowners and reappoint incumbent directors who fall short of majority support in uncontested elections.
For several years, CII has tried to persuade the Council of the Corporate Law Section of the Delaware State Bar Association and the American Bar Association Business Law Section’s Committee on Corporate Laws to modernize their standards for uncontested director elections. Both embrace the antiquated plurality vote standard. Upgrading Delaware’s corporate law rules is critical because about half of all U.S. public companies are incorporated in the state. ABA standards apply to companies incorporated in the more than 30 states that have adopted the ABA’s Model Business Corporation Act. .
Resources & Advocacy
CII corporate governance policy on majority voting for directors
Learn about CII's annual letter-writing campaign urging boards not to reappoint "zombie" directors (members only)