VEA Vice Chair Nell Minow is quoted in this story about directors who continue to serve even though a majority of shareholders have voted against them.
Nell Minow, an expert on corporate governance, calls them the zombie directors. They’re board members who’ve failed to get a majority of shareholder votes in elections but continue to serve. From 2012 to 2016 there were a total of 225 instances where directors of public companies got less than half the votes cast, but only 44 directors, or 20 percent, left within the next election cycle, according to a Bloomberg analysis of data from ISS Corporate Solutions Inc. The directors who stayed included 30 who were snubbed by shareholders more than once.
“You either participate in capitalism or you don’t,” says Minow, vice chair at ValueEdge Advisors, which works with institutional investors on governance issues. She says too many companies “pretend there is this right to replace the board when they don’t represent the interest of the shareholders” but don’t follow through.