• Council of Institutional Investors warns of “Zombie” Directors on Corporate Boards
  • December 21, 2016
  • Law Firm: Greenberg Traurig LLP - New York Office
  • The Council of Institutional Investors, or CII, released an advisory article on “zombie” directors on corporate boards. A zombie director is a director who failed to win majority support of shareholders in an annual election, regardless of the company’s vote requirement, but still remains on the board.

    CII reported that, in 2016, 40 of the 44 directors at Russell 3000 companies who failed to win majority support from their shareholders are still continuing to serve as directors.

    While these zombie directors are elected by legal means—via their company’s plurality vote standard—in reality, this can mean that a nominee can win an election upon receiving just one favorable vote since most directors run uncontested. CII stated its belief that directors who fail to win majority support in uncontested elections should resign from the board and not be reappointed. According to CII, plurality voting results in “rubber-stamp elections and directors who are not truly accountable to shareholders.”

    Since 2010, CII has annually urged Russell 3000 companies that elect directors via plurality vote to adopt true majority voting.

    http://www.cii.org/files/about&under;us/press&under;releases/2016/10&under;31&under;16&under;cii&under;press&under;release&under;zombie&under;directors&under;final.pdf