Majority Voting

Quick Facts

Standard: Director must receive more "for" than "against" votes

Alternative: Plurality voting (most votes wins, regardless of %)

Prevalence: ~90% of S&P 500 companies use majority voting

Key issue: What happens when a director "fails"?

Majority voting is a director election standard requiring candidates to receive more votes "for" than "against" to be elected. Unlike plurality voting—where whoever gets the most votes wins—majority voting means directors can actually lose elections, creating real shareholder accountability.

In Plain English

Under plurality voting, even if 90% of shareholders vote against you, you still win if you're the only candidate. Majority voting changes this: you need more "yes" votes than "no" votes. If shareholders reject you, you're actually rejected—not just less popular than someone who didn't run.

Majority vs. Plurality Voting

Feature	Majority Voting	Plurality Voting
Requirement	More "for" than "against"	Most votes among candidates
Uncontested elections	Can fail	Cannot fail
Withhold votes	Counted as against	Don't affect outcome
Director accountability	Real	Minimal
Prevalence (S&P 500)	~90%	~10% (declining)

The Mechanics

Uncontested Election (One Candidate per Seat)

Plurality:

Director is guaranteed to win
"Withhold" votes have no effect
Even 1 "for" vote = victory

Majority:

Director must get 50%+ "for" votes
"Against" votes count against director
Can actually lose

Contested Election (Multiple Candidates)

Both systems typically revert to plurality:

Candidates with most votes win
Prevents deadlock

The "Failed Election" Problem

When a director doesn't receive majority support:

Resignation Policies

Most companies with majority voting require directors to submit a contingent resignation that takes effect if:

Director fails to receive majority vote
Board decides to accept the resignation

Board discretion means failed directors don't automatically leave—the board evaluates:

Reason for opposition
Director's qualifications
Board composition needs
Transition planning

Holdover Rules

In some states, directors "hold over" until successors are elected, meaning:

Failed director stays on board
Board must appoint replacement (or accept resignation)
Governance gap avoided

Why Majority Voting Matters

Before Majority Voting (Pre-2006)

Famous "failed" elections under plurality:

Directors receiving 30-40% support
No consequences whatsoever
Shareholders had no real voice in uncontested elections

The Shift to Majority Voting

2006: Pfizer became first major company to adopt
2010: ~70% of S&P 500 had adopted
Today: ~90% of S&P 500 use majority voting

ISS and Glass Lewis recommendations accelerated adoption.

Types of Majority Voting

Modified Majority Voting (Most Common)

Majority standard applies to uncontested elections only
Reverts to plurality in contested elections
Director submits contingent resignation
Board has discretion to accept or reject

True Majority Voting (Rare)

Majority standard applies always
Failed director is automatically removed
More aggressive but operationally risky

Plurality Plus Policy

Plurality voting standard remains in place
But board policy requires failed directors to resign
Less protective than bylaw-based majority voting

Withhold vs. Against Votes

Vote Type	Effect Under Plurality	Effect Under Majority
For	Counted for director	Counted for director
Withhold	No effect	Typically same as abstain
Against	Usually not available	Counted against director

Key distinction: True majority voting uses "for/against"; plurality uses "for/withhold."

Famous Failed Elections

Vanguard CEO (2021)

Tim Buckley received only 43% support for the Vanguard board—though he was not removed due to board discretion.

ExxonMobil (2021)

While not a majority voting failure, activist Engine No. 1 won three board seats against management's slate—showing majority voting's cousin, contested elections, can matter.

Various Banks (2008-2009)

Post-financial crisis, multiple bank directors received sub-majority support, forcing resignations and board reconstitution.

Strategic Implications

For Shareholders:

Votes matter: "Against" votes have real consequences
Engagement leverage: Threat of failed election drives engagement
Proxy advisors: ISS/Glass Lewis recommendations are influential

For Boards:

Vulnerability: Directors face actual accountability
Resignation policies: Must have clear process for failures
Engagement: Must address shareholder concerns proactively

Current State of Play

The norm today:

Majority voting for uncontested elections
Plurality for contested elections
Contingent resignation policies
Board discretion on accepting resignations

Remaining debates:

Should boards have discretion after failed elections?
Should contested elections use majority standard?
Are resignation policies strong enough?

Practical Takeaways

For shareholders: Your "against" vote actually matters under majority voting—use it. Pay attention to proxy advisor recommendations and engage with companies on governance concerns. A credible threat of failed election drives board responsiveness.

For directors: Take shareholder concerns seriously. A failed election is embarrassing and career-damaging, even if the board doesn't accept your resignation. Proactive engagement is better than fighting proxy advisory opposition.

Cumulative Voting — Alternative voting method for minority representation
Proxy Fight — When elections become contested
Say-on-Pay — Another advisory vote mechanism