Although our Keysight can adopt this proposal topic in one-year and one-year implementation is a best practice, this proposal allows the option to phase it in.
This proposal topic received overwhelming 79% support from all shares outstanding at the 2022 Keysight annual meeting. It only needed slightly more support to be approved and Keysight could have spent a few dollars with a proxy solicitor to guarantee the required 80% approval vote but failed to do so.
This same scenario was repeated with the supermajority vote standard proposal at the 2023 Keysight annual meeting. The supermajority vote standard proposal also received overwhelming 79% support from all shares outstanding at the 2023 Keysight annual meeting. It only needed slightly more support to be approved and Keysight could have spent a few dollars with a proxy solicitor to guarantee an 80% approval but again failed to do so.
Such repeated negligent behavior sounds like a commitment to torpedo much needed improvement in the corporate governance of Keysight.
Classified Boards like the Keysight Board have been found to be one of 6 entrenching mechanisms that are negatively related to company performance according to “What Matters in Corporate Governance” by Lucien Bebchuk, Alma Cohen and Allen Ferrell of the Harvard Law School.
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.”
A total of 79 S&P 500 and Fortune 500 companies, worth more than $1 trillion, have adopted this important proposal topic since 2012. Annual election of each director could make directors more accountable, and thereby contribute to improved performance and increased company value at no extra cost to shareholders. Thus it was not a surprise that this proposal topic won majority support at Tesla in 2024 even when the biased insider shares, which voted every eligible share, were opposed.
Annual election of each director gives shareholders more leverage if the Board of Directors performs poorly. For instance if the Board of Directors approves excessive executive pay or poorly incentivized executive pay shareholders can soon vote against the Board’s executive pay committee members instead of potentially waiting 3 long years under the current setup.