Few directors get the boot in shareholder elections

If President Obama had a vote, he said, he'd fire Tony Hayward, the chief executive of BP P.L.C.

BP's shareholders did have a vote and when they cast them on April 15, they chose to retain him on the board of directors with a 99.06 percent favorable vote.

Think the outcome might be a little different now that the oil giant is worth about half as much after the disastrous rig explosion on April 20 that killed 11 workers and the subsequent oil spill that has polluted the Gulf?

Even as shareholder activism seems to be generating bigger "no" votes for directors in some cases, it's still rare for a director to get the boot.

Another company dealing with disaster recently is Massey Energy Co. An April 5 explosion in one of its West Virginia mines killed 29 miners. At its May 18 annual meeting, shareholders elected all three director nominees, but the outcome was close with director Dan R. Moore getting the smallest percentage of "for" votes: 55.9 percent.

As I reviewed the results of director elections involving local public companies this spring, I encountered several instances where shareholders seemed to be sending a message.

Former University of Pennsylvania president Judith Rodin received the largest number of "withheld" votes of all 13 nominees for the Comcast Corp. board. Quite possibly, she was feeling some heat from serving on another infamous board, Citigroup Inc. Still, the 42.8 million "withheld" votes cast by Comcast shareholders pale next to the 315.5 million "for" votes Rodin got.

Frank Baldino Jr., founder and CEO of Cephalon Inc., received the fewest "for" votes of its eight nominees. He easily won reelection to the board with 49.8 million "for" votes compared with 6.0 million "against" votes. But a year ago, he'd gotten 57.5 million "for" votes and 1.8 million "withheld" votes.

Baldino also sits on the board at ViroPharma Inc. One of two directors up for election, he again wasn't the favorite, receiving 41.3 million "for" votes, 15.4 million "withheld," and 13.0 "broker non-votes."

I found only one company where directors received less than a majority of favorable votes.

At the May 25 annual meeting of Healthcare Services Group Inc., shareholders cast more "withheld" votes for two of the seven directors than "for" votes. Joseph F. McCartney received 17.97 million "for" votes versus 20.48 million "withheld," while John M. Briggs got 16.43 million "for" and 22.02 million "withheld."

Both were elected under Pennsylvania Business Corporation Law rules governing "plurality" voting. As long as there is a quorum present, even if a nominee gets only one "for" vote, he or she wins election under plurality rules that are common in many states.

Incumbents may be feeling true pressure from the electorate in the political arena this year, but not in the boardroom.