- CII Policies
- Comment Opportunity Tracker
- CII Correspondence and Testimony
- Dual-Class Stock
- Majority-Supported Shareowner Proposals
- Director Elections
- Executive Compensation
- Fair Financial Rules
- Investor-Company Engagement
- Independent Board Leadership
- Legal Issues
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 a majority support should step down from the board and not be reappointed.
Companies with majority voting require uncontested board nominees to receive more "for" votes than "against" votes in order to be elected or re-elected. The alternative method for electing directors is plurality voting, under which the nominees receiving the most "for" votes are elected to the board. (Thus, in an uncontested election, every nominee elected by a plurality wins his or her seat upon receiving just one "for" vote.) Although 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 standard.
CII's FAQ on majority voting
This FAQ explains in fuller detail the range of approaches to electing directors, why it matters and how market participants can support progress toward real accountability.
CII campaign urging companies to adopt majority voting for directors
For many years CII has urged companies to adopt majority voting if a shareholder proposal to adopt the reform received majority support. In the summer of 2016 CII launched a broader campaign to encourage all companies in the Russell 3000 index to adopt majority voting, regardless of their history with related shareholder proposals. The campaign extends to both companies with traditional plurality voting standards as well as companies with "plurality plus" standards.
An example of our outreach is available here. Companies are identified for contact using FactSet data on corporate governance practices. To see the list of companies that have thus far received a letter from CII, please click here (updated August 2, 2017). If you have any additional questions about the campaign, please contact Kylund Arnold at email@example.com.
The campaign's depth is a response to the "majority voting gap" that exists between large-cap companies and smaller companies. According to Activist Insight Governance, 9 out of 10 S&P 500 companies have majority voting in place, while 5 in 10 Russell 2000 companies have it.
Majority voting listing standards
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 FAQ on majority voting
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)