Corporate Board Elections Becoming More Competitive

Chris Gaetano
Published Date:
Oct 8, 2019

While for years incumbent board members losing their spots was rare, over just the past few years, the business world has seen a spike in directors failing to win enough support to retain their seats, according to the Wall Street Journal. Since 2015, the number of public company directors who failed to win support from a majority of voted shares has increased by 39 percent, to a total of 478 would-be directors this year. While directors are traditionally reappointed by overwhelming margins, the Journal added that even more, 1,726, failed to secure at least 70 percent of voted shares.

Much of this pressure, however, has come not from individual shareholders but from institutional investors. The former tend to be more comfortable selling and moving on if they've lost confidence in the company, but the latter tend to have too much of a stake to simply walk away, and so have more of an incentive to try and change things if they think something's wrong. Only a small fraction of board ousters have been precipitated by shareholders, as incumbent directors tend to win 95 percent of the time with them. 

Broadridge Financial Solutions and PricewaterhouseCoopers conducted the analysis, which covered roughly 4,000 U.S. companies holding annual meetings between Jan. 1 and June 30, the peak period for board votes.

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