Shareholders Get a Vote
Shareholders Get a Vote (c) Copyright 2006 by Gerald Czarnecki - All Rights reserved
The activists shareholder groups have made "majority vote" election of directors their primary goal. It is not clear that this will be good for governance, but many boards are going along with the concept.
According to a recent article in Fortune magazine, companies including Intel, Dell and United Technologies have adopted resolutions that enable shareholders to vote directors off the board. Other companies, such as Hewlett Packard, are poised to vote on a resolution that requires the shareholders' majority vote to elect directors. In the article, entitled "Fixing Corporate Boards", writer Marc Gunther explains that the resolutions are intended to put more pressure on the directors to serve as representatives of the shareholders' interests.
"Once directors know they can be voted of office - not to mention embarassed - by disgruntled shareholders, it stands to reason that they will do a better job than they have in the past of representing the interests of corporate owners." http://money.cnn.com/2006/03/0/news/companies/plugg edin_fortune/index.htm
Critics say that the majority vote rule will hinder boards, and that it raises a number of complex issues that will further complicate the existing challenges of compliance and best practices in governance.
About the Author
Gerry Czarnecki promotes excellence in leadership through activities as an author, public speaker & consultant. He also trains boards of directors in corporate governance best practices. For leadership books & programs go to www.the-czar.com; for his business consulting & governance training visit www.deltennium.com
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