GM shareholders nearly adopt proportional voting system
On June 7, the shareholders of one of the world’s largest corporations, General Motors, nearly voted to adopt proportional voting for future elections for the Board of Directors. Almost 49% of shareholders supported cumulative voting over the current winner-take-all system. The proposal for cumulative voting won the highest percentage of the vote of any non-board-recommended measure in GM history.
Under a cumulative voting system, voters can cast as many votes as there are seats to fill. But unlike traditional, winner-take-all systems, voters are allowed to “plump” multiple votes on one or more candidates. If adopted by GM, this method would allow a minority of like-minded shareholders to elect at least one board member by concentrating their votes on a single candidate.
According to Rob Richie, executive director of FairVote –the Center for Voting and Democracy, “Cumulative voting would promote more accurate, balanced representation of the spectrum of the shareholders’ opinions.” In GM’s current winner-take-all system, the Board’s decisions reflect the will of a majority of the majority. Under a cumulative voting system, however, the board’s decisions would reflect the will of a majority of the entire range of shareholder interests, more accurately representing the “true majority” of shareholders and ensuring greater accountability in board decisions.
Many other corporations currently use proportional voting methods to elect their Boards of Directors. About 10% of the S&P 500 use cumulative voting, including Aon, Sears, Roebuck and Company, Toys 'R' Us, Walgreen's and Hewlett-Packard. It has also been recommended by many corporate reformers and socially conscious investment firms such as CalPERS, Parnassus Investments, Calvert and PAX World Fund.
For more information, or to seek comment on these issues, contact Ryan O’Donnell, FairVote’s Communications Director at (301) 270-4616 or [email protected], or visit www.fairvote.org. For detailed information on cumulative voting in corporations, please visit www.fairvote.org/cumulative .