Shareholders of publicly traded companies are asked to vote annually on the board of directors. Usually these elections are uncontested; there is just one name for each slot on the board.
I’m wondering how many people get rejected in these elections each year. Board actions are usually not well observed by the public, so determining who is a bad director is not something a typical shareholder can do. Someone would probably have to have committed a very notorious act to get even a few negative votes.
There must be some statistics on this, but my initial attempts to google this turned up nothing.
“ISS says that only 14 out of 14,000 board candidates were rejected by a majority in 2005’s elections” Detroit News.
Your choice is not ‘for’ or ‘against’, but ‘for’ or ‘withhold’. Most firms use plurality voting rather than majority voting. Basically, a director could get elected with one vote even through there were 1 billion ‘withhold’ votes. In essence, the director wins 1-0.
That is changing as some large firms like Kroger are implementing majority voting. But it won’t be more widespread until institutional shareholders start supporting these measures.
Wow. That sounds like the kind of rubber-stamp ‘parliaments’ that places like Albania and the Soviet Union used to have. I take it that by ‘withhold’ you mean ‘abstain’? Or is there a difference?
Forward corporate democracy?
Of course, that runs up against the perceived need for a corporate command economy…
Another factor would be how many people vote their shares at all anytime a shareholder proxy is sent out for any proposal, not just electing directors. I’ll bet that the percentage is usually VERY low. Most investors simply “vote with their feet” by selling their shares and investing elsewhere if they don’t like what the company is doing. It’s not like being a citizen of a country - there’s thousands of other choices available, and it may be vastly easier to simply wait for an exit point and find another investment than try to influence the course of something you’re holding.
I will confess that it’s only once in a great while I will vote a proxy I’m mailed. Probably about once or twice a year - I have one I will vote on right now. Something exceptional has to come up.