Activist corporate governance reformers are spending too much time—and capturing too much of the media's attention—on fringe issues. One current initiative, for example, focuses on promoting "majority voting" for directors, a process that requires a nominee to receive a majority of the votes cast in order to be elected. Contrast that, these activists warn, with the prevailing procedure that puts a candidate on a board with just a plurality of votes. They claim that under these conditions, directors can be elected with just one "for" vote.
Although they are having a good time tweaking corporate America with this campaign, the scenario they describe is, in reality, impossible.
First, let's understand why the plurality standard dominates director voting. Corporations' internal affairs, including the election of directors, are governed by state law; accordingly, all corporations incorporated in a given state—public or private, big or small—are subject to the same statutory framework. State statutes typically specify plurality selection as the default rule for director elections.
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