Proxy Voting Fact Sheet
The Harvard Law School Forum on Corporate Governance and Financial Regulation 2012-06-14
The declassification of the board of directors is emerging as one of the key highlights of the 2012 proxy season, as shareholder proposals on the subject continue to receive overwhelming support. This and other data from nearly 500 annual general meetings (AGMs) held at Russell 3000 companies in the January 1-April 30 period are discussed in the new edition of Proxy Voting Fact Sheet—the periodic report issued by The Conference Board in collaboration with FactSet Research.
In classified boards, members are divided into classes with directors in each class serving staggered terms (typically three years) so that only one class stands for election each year. Classification is used as a defensive measure to prevent hostile takeovers: when a board is staggered, hostile bidders must win more than one proxy contest at successive shareholder meetings to exercise control of the target. Proposals on declassification seek to discontinue this board structure in favor of a system of annual election for all members. The Fact Sheet reports that across the 17 proposals on declassification that went to a vote in the first four months of the year, the average support level was 75.9 percent of votes cast. The most notable examples included the 85.2 percent approval at Johnson Control, a 78.7 percent vote at F5 Networks, and the 77.2 percent vote at Emerson Electric.