In recent years, investors have increasingly stressed the importance of Board accountability to shareholders. One key governance issue that has emerged in public debate is the demand for Directors to be elected by a majority of votes cast by shareholders. The undersigned offer this statement in support of majority vote elections of Boards of Directors.

Corporate governance experts have long noted fundamental problems with the current system in the United States that does not allow shareholders to actually elect Directors or vote against specific nominees. The current system only allows shareholders to withhold votes from nominees, effectively guaranteeing the election of any nominee to the Board. In practice, withholding votes has proved occasionally successful in registering shareholder discontent, as in the 2004 challenge to the CEO of Disney.  But the system has failed to allow shareholders a significant voice in the election of the governing body of the companies they own.

We believe investors would be better served by a system that allows them to elect or reject a nominee. The current lack of accountability to investors decreases the likelihood of a genuinely independent Board of Directors. Allowing investors to vote directly on Boards of Directors ensures that shareholders can evaluate candidates on their qualifications to oversee a corporation’s activities, rather than provide a rubber stamp for management candidates.

At the same time, majority vote elections can strengthen productive shareholder-Board dialogue on important issues affecting the direction of a corporation. This should prove especially important to investors who believe that substantive issues affecting long-term value are often overlooked by a management focused on short-term stock price fluctuation. Real elections can produce real accountability, and real accountability can promote real dialogue between Boards and investors.

For these clear and compelling reasons, the signatories to this statement support the enactment of reforms allowing direct elections by majority vote of votes cast for candidates to Boards of Directors. These reforms may include, but are not limited to, changes in the electoral systems of specific corporations to allow for majority vote elections of Boards of Directors; shareholder resolutions on majority vote elections at specific corporations; the revision of laws affecting corporate governance structures to enable majority vote elections; and the revision of the American Bar Association model corporate code.

Support for majority vote elections is not a substitute for, or comment on, other proposed changes in corporate governance, such as that of shareholder access to the proxy allowing Board of Director nominations, which are also under consideration at the SEC. Rather, our support for majority vote elections is an integral part of a larger effort to increase the accountability of Boards of Directors to shareholders. We believe this is a reform whose time has come.

Signed,

• Stephen Davis, President, Davis Global Advisors, Inc.
• Steven  Lydenberg, Chief Investment Officer, Domini Social Investments and Director, Institute for Responsible Investment
• Tim Smith, Senior Vice President, Walden Asset Management and President, Social Investment Forum
• Additional Signatories:
• Lauren Compere, Chief Administrative Officer, Boston Common Asset Managemnet, LLC
• Margaret J. Covert, Shareholder Activism Coordinator, NorthStar Asset Management, Inc.
• Sister Anne DeConcini, Coordinator of Socially Responsible Investing, Sisters of Mercy
• Jerome L. Dodson, President, Parnassus Investments
• Gwen Farry, BVM, Sisters of Charity of the Blessed Virgin Mary
• Rian Fried, President, Clean Yield Asset Mgmt
• Valerie Heinonen, O.S.U., Consultant, Corporate Social Responsibility, Dominican Sisters of Hope, Mercy Investment Program, Sisters of Mercy, Regional Community of Detroit, Ursuline Sisters of Tildonk-U.S. Province
• Joe Keefe, CEO, Pax World Funds
• Peter Kinder, President, KLD Analytics & Research, Inc.
• Rev. Joseph P. La Mar, M.M., Corporate Accountability, Maryknoll Fathers and Brothers
• Jim Madden, Senior Portfolio Manager, Progressive Investment Management
• Peri Payne, Social Research Advocate, Harrington Investments, Inc.
• Charles Sandmel, Certified Financial Planner, Brookline, MA.
• Cheryl Smith, Vice President, Trillium Asset Management and Director, Social Investment Forum
• Daniel J. Steininger, Chair of the Board, and Theodore F. Zimmer, President, The Catholic Funds, Inc.
• Indigo Teiwes, Sustainability Research Analyst, Portfolio 21
  Richard W. Torgerson, Director of Social Research & Shareholder Advocacy,
  Progressive Asset Management, Inc.
• Robert Walker, Vice President Sustainability, The Ethical Funds Company