January 07, 2009
Korn/Ferry on Majority Voting
Posted by Lisa Fairfax

In December 2008, Korn/Ferry issued its most recent annual Board of Directors Study, which analyzed information gathered from the proxy data of 891 Fortune 1000 companies as well as information from questionnaires completed by almost 800 directors.  As usual, the Study has some interesting information about board practices both in the US and globally.  For example, it should come as no surprise that directors appear to be spending more time on their board work, and have greater responsibilities.  As a result, directors are being paid more--but no where near as much as their CEOs.  Despite the increased work, directors' satisfaction with their job is increasing.

Something I found particularly interesting was the survey responses with respect to majority voting.  The Study reported that 40% of respondents indicated that their board had adopted the practice of majority voting, and of those that had not adopted the practice, 20% of respondents said that such voting was up for consideration next year.  Yet when asked "do you feel majority voting is a step toward greater shareholder representation or is it a destabilizing factor in corporate governance?,"  80% of the respondents indicated that they believed it was a destabilizing factor.  The survey results certainly indicate that majority voting is not viewed favorably by directors.  And yet, while there are certainly those who question whether or not majority voting truly has any impact, the fact that many boards have adopted majority voting practices despite directors' apparent negative impression of such practices certainly says something about the strength of the majority voting campaign.

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