However, majority vote proposals continue to receive less support at corporations that have adopted resignation policies while retaining plurality voting. This week, similar proposals received 37.5 percent at Wachovia and failed to pass at Burlington Northern Santa Fe. Electronic Data Systems reported that a majority elections resolution got 32 percent support, but that tally counted abstentions as votes against. In February, all three companies adopted governance principles that call on director nominees who get more "withhold" votes than "for" votes to tender their resignations to the board, which then can decide whether to accept it.

These votes are consistent with earlier results, where majority vote proposals failed to pass at Morgan Stanley, Hewlett-Packard, Ciena, and Analog Devices, all of which had adopted resignation policies. Corporate lawyer Martin Lipton, in a memo to clients, said these early votes were a vindication of the Pfizer approach. Nevertheless, proponents said they were encouraged by the 45 percent showing at H-P and the 40 percent vote at Morgan Stanley, noting that those results showed that a significant number of investors believe that companies should go beyond the Pfizer model and adopt a "pure" majority election bylaw, like almost 20 other firms, including Intel and Safeway, have done.

Vote results from Kaman (April 18) and Weyerhaeuser (April 20) were not available by press-time. Neither company has adopted a director resignation policy.

More Policy Changes
Meanwhile, other companies are continuing to revise their board election policies. Among the latest to adopt a director resignation policy is CMS Energy, according to its April 14 proxy statement. On April 10, Liberty Property Trust announced that it had adopted a full majority standard and a director resignation policy. And Host Marriott has decided to support a majority vote proposal by the Carpenters pension fund, according to Ed Durkin, the union's corporate affairs director.

On April 17, Paychex announced that it had changed its bylaws to adopt a "pure" majority standard with a director resignation policy. The move reflects a change of heart for the company, which opposed a binding proposal by the American Federation of State, County and Municipal Employees (AFSCME) at the company's last annual meeting in October. That resolution got 20 percent of votes cast, less than half the 44 percent support received on average by more than 60 non-binding majority vote proposals in 2005.

"The proposal presented last fall, management believes, would have had undesired consequences for shareholders," Jonathan J. Judge, the company's president and CEO, told Governance Weekly. "We said at the time that majority voting was a worthy idea, and since then, we found a way to implement it in a manner that is in the best interest of our shareholders."

Upcoming Meetings
Next week, majority vote proposals will appear on the ballot at 24 companies. Investors at Honeywell (April 24) and Wells Fargo (April 25) will see this season's first two binding resolutions on this issue, both filed by AFSCME. At Honeywell, there also are shareholder proposals seeking to recoup executives' performance bonuses after a restatement, and requesting shareholder approval of golden parachutes and director compensation plans. At Wells Fargo, investors also are seeking to separate the functions of chair and CEO.

On April 26, General Electric (GE) shareholders will have a chance to vote on a majority elections proposal by the Carpenters pension fund. GE, which opposes the resolution, has adopted one of the strongest director resignation policies among the Pfizer-model companies. The policy notes that "absent a compelling reason for the director to remain on the board, the board will accept the resignation."

In an April 13 regulatory filing, the company elaborated on this provision: "For the purpose of this policy, a compelling reason could include, without limitation, a situation in which a director nominee was the target of a 'vote no' campaign on an illegitimate basis, such as racial discrimination, or on the basis of misinformation--or the resignation would cause the company to be in violation of its constituent documents or regulatory requirements."

GE also said it would seek to embed its director resignation policy into its bylaws at its next board meeting. This action would go beyond most of the other Pfizer-model companies, which have adopted director resignation policies through corporate governance policies or guidelines. Majority voting proponents have argued that such policies are not sufficient because they can be rescinded easily by board members.

While ISS has supported all non-binding majority elections proposals that have come to a vote since the start of the 2005 season, its recommendation research staff opted not to support the Carpenters' proposal at GE. The ISS analysis concluded that the company had met the three criteria set forth in the ISS U.S. voting policy for evaluating corporate alternatives to majority voting. For more details on that policy, go to the ISS Policy Gateway here.

Under the policy, ISS considers what measures the company has taken on this issue; the company's arguments as to why its measures would provide a meaningful alternative; and the firm's governance features and history of accountability. The analysis also noted that under the law of New York, where GE is incorporated, changing from a plurality to a majority standard would require amending the company's certificate of incorporation, which must be initiated by the board and endorsed by shareholders.

"By adopting a robust director resignation policy in its bylaws, the company has effected change immediately and has created an acceptable alternative at this time," the ISS analysis noted.