Majority Voting For Directors

The campaign to prompt U.S. companies to adopt majority voting standards in director elections continues to gain momentum. In 2006 alone, more than 150 stockholder proposals relating to majority voting were filed, and more than 25 percent of the companies in the S&P 500 currently have some form of majority voting policy in place. In addition, the Model Business Corporation Act (the "Model Act") and the Delaware General Corporation Law (the "DGCL") were amended in 2006 to facilitate majority voting, and leading proponents of majority voting have indicated that they intend to continue to push the issue in the 2007 proxy season and beyond. SEC Chairman Cox has also voiced his support for majority voting in director elections. In this regard, even companies that already have acted to address the issue could find themselves under pressure from activist stockholders if those companies have adopted a lesser form of majority voting than what certain activists are seeking.