Majority Voting Update, Shareholder Democracy, and How Boards Should Respond to Hedge Funds and Activist Shareholders

The movement toward adoption of a majority voting standard for directors is fully underway, with more and more companies adopting some form of majority voting policy or bylaw amendment. Some believe that even those companies who have not yet been targeted by activist shareholders should act now to adopt a majority vote bylaw, while others contend that it is most prudent to wait for a shareholder to submit a specific proposal. Despite increased shareholder activism and the rise of hedge funds, companies should avoid taking knee-jerk reactions, such as going private, when considering alternatives to dealing with shareholder pressures.