At most U.S. public companies, directors are elected by a plurality of votes cast, rather than by a majority of votes cast. Under plurality voting, a director is elected to the board by virtue of having received the most votes. In an uncontested election, a single vote “for” a candidate theoretically would be sufficient for him or her to win a board seat.
The Council considers plurality voting to be fundamentally flawed: It results in “rubber stamp” elections and directors who are less accountable to shareowners because the shareowners lack a meaningful vote. The Council believes strongly that directors should be elected by a majority of votes cast. Majority voting ensures that shareowners’ votes count and makes directors more accountable to the company’s owners. In 2005, the Council launched a letter-writing campaign urging 1,500 of the largest U.S. corporations to consider adopting majority voting in director elections. Support for this reform has grown swiftly. Currently more than half of all companies in the Standard & Poor’s 500 Index have adopted some form of majority voting.
November 13, 2007 Study of majority voting in director elections by Claudia H. Allen of Neal Gerber Eisenberg