CSP Directors Majority Vote requested in shareholder proposal for 2020 proxy season. This should be an easy but meaningful ask. More than 91% of S&P 500 use that standard. CSP’s market cap is about $55M, so CSP is a very small but even a majority of small-caps use a majority vote standard when electing directors. If CSP directors cannot get 50+% when running unopposed, they should not be serving on our board.
If you are a shareholder, please watch for this item in your next proxy.
CSP Directors Majority Vote Proposal
Resolved: Shareholders hereby request that our Board of Directors initiate the appropriate process as soon as practical to amend our Company’s policies, articles of incorporation and/or bylaws to provide that director nominees shall be elected by the affirmative vote of the majority of votes cast at an annual meeting of shareholders, with a plurality vote standard retained for contested director elections, that is, when the number of director nominees exceeds the number of board seats. This proposal includes that a director who receives less than a majority vote be removed as soon as a replacement director can be qualified on an expedited basis. If such a removed director has key experience, they can transition to being a consultant or a director emeritus.
To provide shareholders a meaningful role in director elections, our Company’s current director election standard should be changed from a plurality vote standard to a majority vote standard where only board nominated candidates are on the ballot.
This will establish a more meaningful vote standard for board nominees and could lead to improved performance. Under our Company’s current voting system, a director can be elected if all shareholders oppose the director but one shareholder votes FOR, even by mistake. More than 90% of the companies in the S&P 500 have adopted majority voting for uncontested elections, as have 69% of the S&P 1500.
In 2019 majority shares voted FOR similar proposals at Stemline Therapeutics, Eldorado Resorts, RadNet, New Media Investment Group, New Residential Investment Group, Safety Insurance Group, First Community Bancshares, GreenHill & Co., and Advaxis.During 2018 majority shares voted FOR similar proposals at Netflix, Marriott International, Discover Financial Services, The Manitowoc Company, and Costco Wholesale.
The voting guidelines of CalPERS, one of our largest shareholders, includes the following: “In an uncontested director election, a majority of proxies cast should be required to elect a director.”
BlackRock’s proxy voting guidelines include the following: “Majority voting standards assist in ensuring that directors who are not broadly supported by shareholders are not elected to serve as their representatives.”
This proposal should also be seen in the context that shareholders:
- Can only act by written consent unanimously,
- Have no right to nominate directors through proxy access provisions, and
- Must vote by a supermajority to amend bylaws.
Consider also that 25% of shares voted against the advisory item on executive compensation in 2019, even though insiders hold 26% of shares. Our Board is locked into an out-dated governance structure that reduces board accountability to shareholders.
How we elect directors is just one of many needed reforms. Please vote FOR.