Shareholders at Newell Rubbermaid on Tuesday voted to require members of the board be elected each year, instead of every three years, in response to a proposal that claimed such a move would give shareholders more control over the company's direction.
Newell Rubbermaid opposed it, saying in its proxy statement and at its annual meeting that such a move would make the company more susceptible to being taken over. Having board members with three-year staggered terms gives Newell Rubbermaid more stability, the company said.
The boards of public companies are split between both election options according to the National Association of Corporate Directors. In 2010, 62 companies voted on shareholder proposals to hold annual elections for all board members; 61 percent of the proposals passed.
Paul Lapides, director of the Corporate Governance Center at Kennesaw State University, said a staggered board makes a lot of sense for a small company that is a potential takeover target. That structure makes it harder for a new slate of directors to be voted in at once. But Lapides said annual elections feel more democratic to shareholders.
"They have more access to get change in the company," he said.
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