By: Cydney Posner

Now that the SEC's proposal for shareholder access to company proxies appears to be moribund, some are agitating for the adoption of a majority vote requirement to replace the all-but-universal plurality vote for directors. Among those promoting this change is ISS, which has now adopted a policy in favor of precatory proposals asking the board to initiate a process to require the election of directors by a majority of votes cast at shareholders' meetings. ISS argues that plurality voting permits a director to be elected even if a there are more votes opposed to his election; however, a "majority vote standard transforms the director election process from a symbolic gesture to a meaningful voice for shareholders." Because of the issues raised by adoption of a majority-vote requirement, ISS believes that boards should have wide latitude in designing their companies' approaches and, therefore, would need to consider carefully whether or not to recommend mandatory proposals.

For Majority Vote Standard Policy, click here.

 

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