Election of Directors

In recent years, numerous corporations, often in response to pressure from activist shareholders who prefer a majority voting standard, which they view as more “democratic,” have adopted the so-called “Pfizer-Style” or “Plurality Plus” corporate governance policy in connection with uncontested board elections. Under such a policy, if a particular board member does not receive the support of a majority of the votes cast (affirmative votes plus votes withheld) with respect to his or her election, then that board member ' although technically elected under the corporation's charter documents ' must submit his or her resignation to a committee of the board, consisting of independent directors. The committee then decides in its discretion, or recommends to the board, whether to accept or reject the resignation. Corporations appreciate the flexibility that these policies provide, in contrast to a strict majority voting provision incorporated into their charter documents (which, among other things, could leave an unclassified board without sitting directors if none receive majority support and are forced to resign).

A Case in Point