Time To Take A Look At Your Bylaws, We Say… To Make Sure They Do Not Have Conflicting Voting Provisions

And Maybe To Consider Moving To A “Simple Majority Vote” To Pass All But The Most Economically Important Proposals

A lot of speculation went on last year and this about the potential effect of the “broker may NOT vote rule”…which turned out to be mainly a non-issue for most companies.

But one thing seems clear, as the examples above illustrate: It is increasingly hard to pass anything that requires “a majority of the voting power present at the meeting in person or by proxy”…commonly known as the quorum.

It will be increasingly tough to meet this standard as fewer and fewer individual investors vote each year… AND as a growing percentage of the voters who vote on some matters decide to abstain on others…And these matters, please note, are typically the “trickier” or more important issues on the agenda.

Quite a few companies have adopted new bylaw provisions of late, to allow a “simple majority”…of the votes cast…to decide the outcomes of most proposals, whether proposed by management or by shareholders. It’s simple, easy to understand, and to handicap…and to calculate…It is eminently FAIR, we think - and will seem so to most voters too. A few companies we’ve seen say “votes cast with respect to the matter being voted on” which seems even better.

P.S. Most state codes – and stock exchange rules too – recognize that some proposals require a higher standard, of course – like a majority of the outstanding shares in favor – in order to properly protect minority interests - and to protect long-term holders from short-term traders and raiders. So clearly, a “simple majority” of the quorum – which can be as low as 50% of the outstanding plus one share – is not always in order.