Also known as: plurality of votes cast · plurality vote
Written by attorneys — see sources below.
A voting standard under which the candidate or slate receiving the greatest number of affirmative votes wins an election. The standard applies once a quorum is present and governs unless the articles of incorporation specify a different requirement such as a majority of votes cast.
Atlas Insurance Group held its annual meeting to fill one board seat. Lopez received 400000 for votes while the next two candidates received 300000 and 200000 for votes respectively. Shareholders also cast 600000 withhold votes. Because the articles and bylaws were silent on voting standards, the plurality rule controlled and Lopez took the seat as the top vote getter.
Helix Pharma conducted its annual meeting to elect directors. Preferred shareholder Atlas claimed the right to cumulate votes based on early term sheets. The charter was silent on cumulative voting and the meeting materials contained no conspicuous statement authorizing it. Under the default plurality rule the management slate received the most votes for each seat and prevailed.
In 1999, Vernon Mercier acquired 100 shares of Inter-Tel, Inc., a company founded over thirty-five years earlier by Steven G. Mihaylo, who continued to own 19% of its shares as its largest stockholder. Inter-Tel provides IP and converged voice, video and data business communications platforms and related services. Since 2005, Inter-Tel had received expressions of interest from potential acquirors, including Mitel Networks Corporation and Francisco Partners, amid internal board conflicts involving Mihaylo. Mihaylo resigned as CEO in February 2006 and as a director in March 2006. A Special Committee of eight independent directors, chaired by Alexander Cappello, was formed to consider strategic alternatives. After negotiations, the Special Committee recommended and the board approved a merger agreement with Mitel on April 26, 2007, for $25.60 per share in cash, with Mihaylo dissenting. The agreement included a no-shop with fiduciary out. On May 29, 2007, Inter-Tel noticed a special meeting for June 29, 2007, with a record date of May 25, to vote on the Mitel merger. Mihaylo opposed the merger and promoted a leveraged recapitalization proposal. Institutional Shareholder Services recommended a no vote on June 19. By June 26, over 49.6% of shares had voted against the merger, and it was clear the vote would fail if held as scheduled. On the morning of June 29, the Special Committee postponed the meeting, announcing a new date of August 2 with a July 9 record date. The committee cited the need for stockholders to consider second quarter results, changes in debt markets, Mihaylo's proxy materials, and Mitel's refusal to increase its bid. Inter-Tel announced preliminary second quarter results on July 6 showing shortfalls, and revised projections on July 23. ISS changed its recommendation to yes on July 24. Mihaylo withdrew his recap proposal on July 25. On August 2, 2007, over 62% of outstanding shares voted in favor of the merger. Mercier, as plaintiff in a class action, sought to preliminarily enjoin the consummation of the merger, alleging improper motivations by the Special Committee in rescheduling the vote.
View caseYes. Withhold votes do not function as negative votes that defeat a candidate. The plurality rule awards the seat to the candidate who receives more for votes than any competing candidate regardless of the number of withhold votes.
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No. The default rule requires only a plurality of the votes cast at a meeting where a quorum is present. A majority requirement must be expressly adopted in the articles or bylaws.
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No. Cumulative voting exists only when the articles expressly authorize it or use words of similar import. Absent such language the default straight voting and plurality election rules apply.
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The meeting notice or proxy statement must conspicuously state that cumulative voting is authorized or a shareholder must give the corporation at least 48 hours notice of intent to cumulate. If one shareholder gives timely notice all others in the voting group may cumulate without further notice.
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…his 46 years in this business. Harkins likewise could not give a real world example where an insurgent garnered that margin of votes in a contested election. Harkins, on the other hand, based his opinion that 67% is “easily” achievable (again, despite the glaring lack of any real world instance where an insurgent has…