Arthur Levitt, former Chairman of the Securities and Exchange Commission said, “In my view it’s best for the investor if the entire board is elected once a year. Without annual election of each director shareholders have far less control over who represents them.”
Almost 90% of S&P 500 and Fortune 500 companies have adopted this vital reform. Annual elections are widely viewed as a best practice. Most investors believe annual election of each director makes directors more accountable, thereby improving performance and increasing company value.
Shareholder resolutions on this topic won 16 of 18 votes at companies in 2019, 2020, and 2021, most by a wide margin.
According to, BlackRock: “Directors should be elected annually to discourage entrenchment and allow shareholders sufficient opportunity to exercise their oversight of the board.” Vanguard generally votes for proposals to declassify an existing board and votes against management or shareholder proposals to create a classified board.
According to Equilar, a trusted leader for corporate leadership data; “A classified board creates concern among shareholders because poorly performing directors may benefit from an electoral reprieve. Moreover, a fraternal atmosphere may form from a staggered board that favors the interests of management above those of shareholders. Since directors in a declassified board are elected and evaluated each year, declassification promotes responsiveness to shareholder demands and pressures directors to perform to retain their seat. Notably, proxy advisory firms ISS and Glass Lewis both support declassified structures.”
Consider our company’s overall corporate governance: We cannot call special meetings, nominate through proxy access, and certain amendments require a supermajority. Our company's technology is second to none. Our corporate governance should meet the same high standards.