Ohio has passed a law making it possible for firms incorporated in the state to adopt majority voting in director elections.

The measure, signed on July 19 by Gov. Ted Strickland, was a response to requests from several union pension funds and Ohio companies for a change in the plurality-only standard set forth in the state’s corporations law. As of Jan. 1, companies will be allowed to amend their articles of incorporation to provide for a majority vote standard.

The legislation was introduced in March by Ohio Rep. Bill Seitz, a Republican, and it passed unanimously in both the state’s House of Representatives and the Senate.

Some of the pressure to amend the law stemmed from novel shareholder proposals, filed at 14 Ohio-incorporated companies this year, asking them to reincorporate in Delaware, where a majority vote standard is permitted. The major proponents of these resolutions, the United Brotherhood of Carpenters and Joiners of America and the Sheet Metal Workers International Association, withdrew most of the proposals when the companies agreed to lobby legislators to change the state’s law.

"Most companies said, 'We'd rather not take the reincorporation [proposal].' Most of them agreed to support the legislation," Ed Durkin, director of corporate affairs for the Carpenters, told Governance Weekly.

This willingness to back the legislation--although it does not mandate majority voting--might indicate a receptiveness on the part of Ohio companies in the future to either putting shareholder-sponsored proposals to a vote or amending their bylaws without shareholder pressure, Durkin said.

The three reincorporation proposals that were voted this year all received 30 percent support or higher. One Carpenters proposal, filed at human resources consulting firm Convergys, won 59.5 percent of the votes cast "for" and "against."

The passage of the law is part of a larger trend toward majority voting in the past two years. As of Aug. 7, 63.8 percent of the firms in the S&P 500 index had adopted board election reforms--either a plurality standard with a director resignation policy, or a full majority vote standard, according to Claudia Allen, a partner with the law firm of Neil, Gerber & Eisenberg in Chicago.

An updated copy of Allen’s paper, "Study of Majority Voting in Director Elections," will be available at the law firm’s Web site this fall.