Strine on Shareholder Voting

Vice Chancellor Strine of the Delaware Chancery Court has authored an article on shareholder voting in the Harvard Law Review.  The some to be published piece suggests, but does not endorse, that state laws be changed to allow contested elections for boards of directors every three years.  Insurgents would appear on the management proxy card and get their expenses reimbursed if they receive over 35% of the shareholder votes.  Companies that choose to use the system would be exempt from including Rule 14a-8 shareholder resolutions in their proxy materials.  Strine's proposal is another in a long line of suggestions made to invigorate shareholder voting.  The high water mark of the many suggestions was the 2003 rule proposal by the SEC, now languishing and apparently withdrawn, that would allow institutional investors to put a short slate of candidates on a company's proxy card if management candidates in the previous election had received a high percentage of "abstain" votes.  Rather than mandate a given voting system, I would favor state rules that facilitated firm experimentation with voting procedures as long as the details of any system proposed by management were disclosed to shareholders.  A state law that required shareholder to periodically (every five years?) reconsider voting system options would get my endorsement (not just be my suggestion).