"My guess is that if these companies had not adopted the director resignation policy there would be a stronger vote in favor of the shareholder resolution," Charles Elson, a law professor at the University of Delaware, told Governance Weekly. "The availability of this middle-of-the-road approach [between a simple plurality and a majority standard] will bring the numbers down somewhat, but given the general appeal of majority vote, it will still get strong support."

The proponents are more optimistic. Ed Durkin, the Carpenters' corporate affairs director, predicts that the resolutions will fare well because mutual funds are more inclined to support majority voting this year, and the union has targeted more broadly held companies.

"I think we will pick up right where we left off and probably just do better than last year," Durkin told Governance Weekly. Even at companies that have a director resignation policy, "shareholders want a majority vote standard," he said.

The three companies adopted director resignation policies last year in response to a strong showing by majority vote proposals filed by the Carpenters and other building trade unions. Those proposals averaged 44 percent of votes cast at more than 60 companies, more than triple the support that similar resolutions received in 2004.

So far, more than 50 companies, starting with Pfizer last June, have adopted director resignation policies while retaining plurality voting. Under those policies, directors are asked to tender their resignation if they receive more "withhold" votes than "for" votes.

Hewlett-Packard sought to exclude the Carpenters' proposal from its proxy on the grounds that it had substantially implemented a majority standard with its resignation policy. On Jan. 5, the Securities and Exchange Commission refused to allow the company to omit the proposal. All three companies referred to their resignation policies in urging shareholders to reject the majority standard proposal.

The Carpenters contend that a resignation policy does not go far enough and that only an explicit majority standard in uncontested elections would provide shareholders with a meaningful vote.

ISS Supports Majority Vote Proposals
The ISS recommendation research staff is advising investors to support the Carpenters' proposals at all three companies. Last year, ISS supported all non-binding resolutions on majority elections, but recommended against a binding proposal by the American Federation of State, County & Municipal Employees (AFSCME) at Paychex, primarily because the resolution did not provide an exception for contested elections.

Under its policies for recommendation research clients, ISS will generally recommend voting in favor of shareholder proposals calling for directors to be elected in uncontested elections with an affirmative majority of votes cast, including binding resolutions requesting that the board amend the company's bylaws to adopt a majority standard. However, the policy leaves the door open for recommending against such proposals, if the company adopts an alternative policy and meets three requirements:

-The company adopts and discloses in detail formal corporate governance principles that present a meaningful alternative to a majority standard and provide an adequate response regarding both new nominees and incumbent nominees who fail to receive a majority of votes cast.

-The company articulates to shareholders why this alternative to a full majority standard is the best structure at this time for demonstrating accountability to shareholders.

-The company has a history of accountability to shareholders, e.g., it has responded to majority supported shareholder proposals in the past and holds annual elections for all directors.

For more details on this ISS policy, please visit here.

In the case of Analog Devices, ISS noted that the company did not explain why its new director resignation policy is preferable. The company still has a classified board and last year paid a $3 million SEC penalty over its stock-option practices. ISS also faulted Hewlett-Packard for not providing sufficient details on the director resignation process and timelines, as well as not explaining adequately why the policy was most appropriate.

Likewise, ISS concluded that Ciena failed to make the case for its director resignation policy. The company also has a classified board, a poison pill that was adopted without investor approval, restrictions on shareholders' ability to act by written consent, and supermajority voting requirements, ISS noted in its vote recommendation.

Upcoming Votes
The Carpenters, which account for submitting more than half of the roughly 140 majority election proposals filed this proxy season, continue to press for election changes at almost a dozen other companies that have adopted director resignation policies, including Borders, Capital One, Chubb, Eli Lilly, General Electric, Mack-Cali Realty, Marsh & McLennan, MeadWestvaco, Raytheon, Safeway, and Wells Fargo.

Another Carpenters' majority vote proposal will be on the ballot on April 6 at Novell, which has not adopted a director resignation policy. A non-binding majority elections proposal, filed by AFSCME, is on the ballot April 4 at Morgan Stanley. AFSCME has filed binding proposals at Honeywell, Qwest Communications International, and Wells Fargo, and withdrew one from United Technologies, which has adopted a majority standard.

The Carpenters' union has withdrawn its non-binding proposals at companies that have adopted a majority election bylaw and a director resignation policy, including Pepco, Dell, Gannett, and Supervalu, and Motorola. The union also withdrew its proposal at Texas Instruments, which adopted a majority standard without a director resignation policy.

Intel's Approach
In January, Intel became one of the first major companies to adopt a "pure" majority vote standard. The computer-chip maker was part of a corporate-labor work group organized by the Carpenters last year to study director elections. Another company that has recently adopted this ""Intel" model is Career Education. Last year, management's three nominees each received a record withhold vote--roughly 70 percent of votes cast.

Ameren adopted a similar director resignation policy and switched to a majority standard last August when the utility company abolished cumulative voting, in keeping with the corporate laws of Missouri, its state of incorporation, said Ronald Evans, the company's deputy general counsel.

Under the Intel model, new nominees (who haven't served for a single day at the time of the election) and do not get a majority of votes cast would not be legally elected, and thus would not be protected by the so-called "holdover rule." The holdover rule, applied both under Delaware law and in states that follow the Model Business Corporation Act, states that an incumbent director even if opposed by a majority of shareholders, remains on the board until a replacement is elected and qualified.

However, that may be a moot point at many companies where it is standard practice for boards to appoint new directors to office before the annual meeting, which would give those new nominees incumbent status, according to Patrick McGurn, ISS senior vice president. Neither the Intel nor Pfizer policies require the immediate exit/ouster of an incumbent director who fails to get the requisite support level. State law holdover director rules, by and large, keep the final decision on the continuation of directors in the hands of the board (or a subset of the directors).

The Carpenters' union said it has also withdrawn proposals at Advanced Micro Devices, Federal Realty Investment Trust, Hartford Financial Services, ProLogis, Temple-Inland, and UnumProvident after these companies agreed to institute a majority standard. Durkin predicted that another half a dozen companies will adopt a majority standard in the coming weeks and that the total may reach "a few dozen."

"In the aftermath of another strong season this year, we are going to see more companies moving," Durkin said. "The strong momentum is not lost on too many of these companies."

There is another set of more than 40 companies, including Abbott Laboratories, Automatic Data Processing, Dillard's, Emerson Electric, U.S. Bancorp, and Viacom that have adopted a majority standard without a resignation policy, because of the jurisdiction where they are incorporated (e.g., Illinois, Missouri, or Puerto Rico), as a result of a litigation settlement, or voluntarily. Most of these companies changed their election standards before the 2005 proxy season.

Looking Ahead
Charles Elson, who also is director of the John L. Weinberg Center for Corporate Governance at the University of Delaware, predicts that progress will continue to be made toward some form of a majority standard, but he said the emerging issue will be facilitating more contested elections.

"I don't think majority voting is the answer to the whole problem; the real answer is creating more vibrant elections," Elson told Governance Weekly. "To me, the long-term solution is some kind of a proportional reimbursement provision for a short-slate successful proxy contest."

Research Editor Rosanna Landis Weaver and Director of Publications Ted Allen contributed to this article.