If you think the 2006 proxy season was rough, you ain’t seen nothing yet. Next year might bring major shifts in the way corporate directors are elected. If these changes take hold, they would drastically alter the dynamics of the boardroom.
Among the most significant is a change to the traditional majority vote. There are different varieties of majority voting, but they are very different from today’s plurality system. In most cases today, if a director is running uncontested and obtains just 20% of the shareholder vote, he or she is elected. But most majority voting plans would require that a majority of all shareholders, meaning more than 50%, actually support the director.
John Connolly, CEO of Institutional Shareholder Services, the hugely important proxy advisory firm, said the number of majority voting resolutions that will come up at annual shareholder meetings in 2007 will hit 450, up from 140 in 2006 and just 89 in 2005. He made his remarks at Directorship magazine’s Agenda 07 Boardroom Forum in New York.
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