August 19, 2005

Majority Voting: Disney Latest to Amend Corporate Governance Guidelines Ala Pfizer

As noted in this press release, the Walt Disney Co. announced yesterday that they have amended their corporate governance guidelines to provide that any director who receives a “withhold” vote representing a majority of the votes cast for his or her election would be required to submit a letter of resignation to the Board’s Governance and Nominating Committee, which in turn would recommend to the full Board whether the resignation should be accepted.

Are There Different Flavors of Majority Vote Governance Guidelines?

Note that Disney’s standard parallels the “Pfizer” guidelines (ie. based on a majority of votes cast); whereas Office Depot’s standard requires a withhold or against from “a majority of the Company’s shares.” That sounds like it means a majority of outstanding shares would need to withhold, which is a higher standard – and arguably not even a “majority vote” standard because a majority of those voting could withhold and yet not trigger the guideline.

If Office Depot sticks with that type of standard, I wonder if they are going to add an “against” box to their proxy card? For some insight on the ramifications of such an action, continue reading below…

Analyzing the Majority Vote Proposals

Keith Bishop provides some interesting analysis of the outstanding majority vote proposals in this text interview, including addressing many practical (and legal) impediments, such as:

– How does failure to execute a proxy interplay with withholding votes?

– Is the majority vote concept permissible under California law?

– What is the signficance and ramifications of including an “against” box on the proxy card?

– How does cumulative voting play into all of this?

So far, I hear that the ABA Task Force has received 27 comment letters on its discussion paper. Comments were requested by August 15th but I know they are still dribbling in – so keep them coming!