Why Hasn’t Schwab Acted on Shareholder Support to Declassify the Board?
According to the Schwab 2025 opposition statement, James McRitchie’s shareholder proposal to declassify Schwab’s Board received majority support. In response, our Board introduced its own proposal — which also gained majority support but narrowly missed the company’s unusually high 80% supermajority threshold. And then… silence.
Since then, Schwab’s Board has taken no action to reintroduce the proposal or lower the 80% barrier that blocked its passage. In the Schwab 2025 opposition statement, our Board acknowledges past support. Still, it uses the prior shortfall as a reason not to try again—despite a record-high 2024 voter turnout that could have enabled meaningful reform.
This failure to act shows exactly why annual elections are needed: to hold our directors accountable when they ignore clear shareholder mandates. See more arguments below to bring real accountability to Schwab.
Schwab 2025: Declassify the Board Proxy
James McRitchie’s proposal requesting annual elections is one of several items on the proxy to be voted on the day before or during the Charles Schwab Corporation annual meeting on May 22, 2025, at 9:00 a.m. Pacific time.
In the past, I’ve provided recommendations on how to vote at most companies where I presented a proposal. However, most of my readers with large institutional investors vote using the services of a traditional proxy advisor, such as ISS, Glass Lewis, or Egan Jones.
If you are not subscribed to such services, you can now easily create your own proxy voting policy, as I have done, or choose one aligned with your values and have your votes cast automatically for free or at a very low cost through iconikapp.com. Therefore, I am not inclined to spend time convincing you how to vote on most issues here.
When in doubt about how to vote on an individual item, I often refer to the two funds that post their votes before meetings and the reasons for all their votes: Calvert and Norges. However, they are not so good at analyzing new issues. Blomberg Professional Services generates automated news stories when these funds vote at a company: Norges, CalPERS, CalSTRS, Florida SBA, Ontario Teachers, and Calvert. I provide links to a few more fund votes in my Shareholder Action Handbook.
Schwab 2025: Core Issues
At the proposal’s heart is a simple, powerful idea: directors should be accountable to shareholders annually. Yet Schwab’s Board clings to a classified structure where directors are only up for election every three years—a model increasingly viewed as outdated and anti-accountability.
Schwab says it values stockholder input. If so, it should embrace the principle that earned trust is re-earned regularly. Annual elections don’t threaten long-term planning — they strengthen board responsiveness and investor confidence.
Declassification Is the Norm, Not the Exception
Over 90% of S&P 500 companies have already moved to annual elections. Why? Because institutional investors, proxy advisors, and governance leaders agree; annual elections discourage entrenchment and align board members with shareholders.
Even major, largely passive, investors like BlackRock support declassified boards, stating:
“Directors should be elected annually to discourage entrenchment and allow shareholders sufficient opportunity to exercise their oversight.”
Equilar, a leader in board data, notes that classified boards are increasingly seen as outdated and may foster a “fraternal atmosphere” that favors management’s interests over those of shareholders. Institutional investors, governance experts, and proxy advisors agree — annual elections are a hallmark of strong corporate governance. The trend is clear: declassification is not radical — it’s best practice. It’s good corporate governance.
Schwab 2025: Rebutting the Board’s Core Arguments
It is common for the Board to want its nominees re-elected. This year, as in most years, all Schwab director nominees are current board members. Free-Float Analytics classifies the Board Type as Totalitarian. Look closer at Schwab’s rationale for opposing declassification. It doesn’t hold up.
“A classified board supports long-term planning.”
This is a red herring. Annual elections don’t force experienced directors out. They make each director more accountable to shareholders every year. If a director performs well and aligns with shareholders, they will be re-elected.
Strong governance and long-term thinking are not mutually exclusive; they go hand-in-hand.
“We need stability and institutional knowledge.”
A staggered board isn’t the only path to stability. Continuity can be preserved even with annual elections. While experience matters, so does fresh thinking. Regular elections allow shareholders to refresh the Board when needed—a crucial lever, especially in an evolving financial landscape.
Strong company fundamentals, a well-performing management team, and a vigilant, engaged Board are the fundamental protections against instability, not staggered elections.
“We already tried this, and shareholders didn’t support it.”
That’s misleading. The 2022 proposal to declassify the Board received majority support — it just didn’t hit the unusually high 80% threshold required by Schwab. That’s not a failure of will from shareholders; it’s a failure of the structure itself due to the Board’s desire for entrenchment.
Moreover, turnout in 2024 exceeded 83%, potentially enabling removal of that very supermajority hurdle. However, the Board didn’t respect shareholder wishes by including either a measure to declassify the Board or to reduce the supermajority barrier. So why not act now while shareholder momentum is strong?
Schwab 2025: Misleading “Accountability” Claims
Schwab argues that one-third of the Board is elected annually and that self-evaluations ensure accountability. However, internal evaluations are no substitute for shareholder voice. Annual elections are the gold standard of board accountability. Anything less is a diluted form of oversight.
Don’t Be Fooled by the Takeover Defense Argument
Schwab raises the specter of hostile takeovers. But this is a dated argument. Most institutional investors — and governance experts — now reject staggered boards as effective takeover defenses. A truly robust company doesn’t need entrenchment to stay safe — it needs performance, transparency, and shareholder trust.
The Bottom Line: Vote FOR Proposal 4 to Declassify the Schwab Board
This isn’t about upheaval. It’s about modernizing governance and giving shareholders a meaningful voice every year. Accountability drives performance. Well-performing directors won’t be ousted, but poorly performing ones might. That’s the point.
It’s time for Schwab to join the ranks of best-governed companies and move toward board accountability that reflects today’s expectations.
Let’s move from outdated structures to modern governance — and strengthen shareholder rights in the process.
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