Saturday, January 20, 2007

From Plurality to Majority

On Tuesday, Yahoo!'s Nominating and Governance Committee met and changed its corporate bylaws to require a "majority" of votes be cast for all its directors at future Annual Meetings of Shareholders. If 50% + 1 shares are not voted in favor of a nominated director, that person will not return to Yahoo!'s board. The change was noted in a filing with the SEC yesterday and reported in MarketWatch.
The "majority" vote criterion is a change from a "plurality" vote criterion, which meant that only 1 vote needed to be cast in favor of a director for him to be returned to Yahoo!'s board.
The changes require all directors to provide an "irrevocable" letter of resignation to the Board prior to the elections and they will be accepted if they do not receive a majority of votes from shareholders.
This change only stands for "uncontested" elections. Plurality voting is still in effect otherwise.
Overall, this is a good move for Yahoo!, its corporate governance standards and its shareholders. If shareholders do not wish certain directors should return, they can simply withhold their vote.
In the current version of "Plan B" -- available here -- our community is recommending changes at the board-level and therefore suggest that Yahoo! shareholders withhold votes for Terry Semel, its Compensation Committee including Arthur Kern, Ron Burkle, and Roy Bostock, and Eric Hippeau at the next Annual Meeting of Shareholders.

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