Clear Channel Communications is the latest among a growing number of companies to institute some sort of majority vote requirement for electing directors.
In the case of the radio owner and advertising company, it has amended its bylaws to change the vote standard for the election of directors from a plurality to a majority of votes cast in uncontested elections. Under the new rule, the number of votes cast “for” the election of a director must exceed the number of votes cast “against” the election of that director.
In contested elections, in which the number of nominees exceeds the number of directors to be elected, the voting standard will continue to be a plurality of votes cast. In addition, if a nominee who already serves as a director is not elected, the director must immediately tender his or her resignation to the board. Then, the nominating and governance committee will recommend whether to accept or reject the resignation, or whether other action should be taken.
Clear Channel is one of more than two dozen companies to implement the so-called “Intel model.” In January, the chipmaker unveiled its bylaw amendment to make majority voting a requirement.
Several companies have enacted director resignation policies, also called a “modified plurality” policy or the “Pfizer model,” because they followed in the footsteps of the drug maker’s voting standard last year. Under the Pfizer model—which does not mandate a bylaw change—a company only requires that a director to resign if he or she receives a majority of “withhold” votes. A director wins election if a majority of the votes are not “withheld” against the director. So, the director can still win if he fetches less than 50 percent of the votes cast.