Understanding Uncontested Director Elections

63 Pages Posted: 10 Jun 2014 Last revised: 14 Aug 2016

See all articles by Yonca Ertimur

Yonca Ertimur

University of Colorado at Boulder - Department of Accounting

Fabrizio Ferri

University of Miami - Miami Business School; European Corporate Governance Institute

David Oesch

University of Zurich

Date Written: November 20, 2015


We examine the determinants and consequences of voting outcomes in uncontested director elections. Exploiting a unique hand-collected dataset of the rationale behind proxy advisors’ recommendations — the primary driver of voting outcomes —, we document the director and board characteristics that voting shareholders focus on (as well as those that they neglect), their evolution over time and their relative importance. Absent a negative recommendation, high votes withheld are infrequent, highlighting the agenda setting role of proxy advisors. While high votes withheld rarely result in director turnover, our analyses show that firms often respond to an adverse vote by explicitly addressing the underlying concern. Overall, it appears that shareholders use their votes in uncontested director elections to get directors to address specific problems, rather than to vote them on or off the board, but they do so only on matters highlighted by the proxy advisors.

Keywords: director elections, shareholder votes, proxy advisors, board of directors, shareholder activism

JEL Classification: G34, G30, M40

Suggested Citation

Ertimur, Yonca and Ferri, Fabrizio and Oesch, David, Understanding Uncontested Director Elections (November 20, 2015). 27th Annual Conference on Financial Economics and Accounting Paper, Available at SSRN: https://ssrn.com/abstract=2447920 or http://dx.doi.org/10.2139/ssrn.2447920

Yonca Ertimur

University of Colorado at Boulder - Department of Accounting ( email )

419 UCB
Boulder, CO 80309-0419
United States

Fabrizio Ferri (Contact Author)

University of Miami - Miami Business School ( email )

Coral Gables, FL 33146-6531
United States

European Corporate Governance Institute ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels

David Oesch

University of Zurich ( email )

Rämistrasse 71
Zürich, CH-8006

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