November 15, 2015

Skirting Rules, Board Members Remain in Spite of Lost Support

Two-thirds of corporate directors who failed to win majority support for re-election this year have remained in their jobs, despite policies requiring directors to tender their resignations when they lose votes. A review of 2015 voting trends by Kingsdale Shareholder Services shows 21 directors of Toronto Stock Exchange-listed companies received less than 50 per cent support from shareholders in board elections this year. Seven directors later resigned, while 14 have remained on their boards. The votes are being closely watched by shareholder advocates after the TSX introduced a new rule last year requiring listed companies to adopt majority voting policies, which are corporate policies that require directors to tender their resignations if they receive less than 50 per cent voting support. The TSX policy allows boards to reject the resignations in “exceptional circumstances.” But that loophole appears to have been used in many cases.

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