Companies with a “plurality plus” standard for electing corporate board directors have a new warning to contemplate from the Delaware Supreme Court: Yes, you can ignore shareholder votes calling for a director’s ouster, but it will come at a price.
The case in question, Westland Police & Fire Retirement System v. Axcelis Technology, is the first to challenge a board’s decision not to accept a director’s resignation under a plurality-plus voting standard. That standard does not require directors to win an outright majority of votes to be elected, but it does require them to offer their resignation if they don’t. Boards then have the discretion to accept or decline the resignation.
