June 29, 2006

Majority Vote Standards in Charters

In this podcast, Bob Smith, Associate General Counsel of Progress Energy, discusses how – and why – Progress Energy voluntarily proposed to change its charter to adopt a majority vote standard (a proposal which shareholders recently approved), a standard that ISS now refers to as the new “gold standard” in the majority vote area, including:

– What did Progress Energy’s board do recently that led ISS to call it the “gold standard”?
– Can you describe Progress Energy’s charter amendment?
– What reaction have you received from shareholders?

Prevalance of Majority Vote Reforms

According to this recent Washington Post article, nearly 145 of the companies in the S&P 500 now either have a majority vote standard or a director resignation bylaw or policy.

Growing Support for Majority Vote Proposals

As noted recently in the ISS “Corporate Governance Blog,” shareholder support for proposals seeking majority voting in director elections has averaged 47.3% support at 80 meetings this season. Last year, those proposals averaged 44% at 60 firms. This season, majority vote proposals received an average of 54.5% approval at 33 meetings where companies had not previously announced board election reforms, such as a director resignation policy. Support was lower at firms with director resignation policies such as the one at Pfizer and over 90 other firms, averaging 42.1% at 47 meetings this season.