Cincinnati Bell 2007 Annual Report Download - page 37

APPROVAL OF A COMPANY PROPOSAL
TO REQUIRE A MAJORITY VOTE FOR THE ELECTION OF A DIRECTOR
(Item 3 on the Proxy Card)
Proposal: To amend the Company’s Restated Amended Articles of Incorporation to require a majority vote for
the election of a director and to approve an amendment to the Company’s Amended Regulations
addressing “holdover” directors.
Current Standard
Prior to January 1, 2008, Ohio law mandated that directors be elected by a plurality of the votes cast; that is,
director nominees with the most votes cast in their favor are elected, notwithstanding any withheld votes or votes
against their election. Effective January 1, 2008, Ohio law has been amended to allow companies to provide for a
majority vote for the election of a director by providing that, unless the Articles of Incorporation otherwise
provide, directors are elected by a plurality of the votes cast. The Company’s Amended Articles of Incorporation
are silent on this issue presently. As a result, the plurality standard governs the election of directors of the
Company.
Description of Amended Articles of Incorporation Amendment and Amended Regulations Amendment
Generally
The Board has adopted and now recommends shareholder approval of proposals to amend: (i) the
Company’s Amended Articles of Incorporation to require that a candidate in an uncontested election for director
receive a majority of the votes cast in order to be elected as a director, and (ii) the Company’s Amended
Regulations to handle “holdover” director issues. In contested elections where the number of nominees exceeds
the number of directors to be elected, the vote standard would continue to be a plurality of the votes cast.
Background
Shareholders of many public companies have recently urged that directors be required to receive a majority
of the votes cast in favor of their election rather than the generally applicable plurality standard (which simply
requires more votes than those of any other candidate). In fact, last year, the Company received such a proposal
from one of its shareholders; however, Ohio law at that time did not permit a majority vote standard and, as such,
the proposal was not submitted to the shareholders last year. The Company agreed with that shareholder to
support such standard at a time when the Ohio law allowed. In response to similar shareholder requests, a number
of public companies have recently adopted charter or bylaw provisions requiring a majority vote standard and/or
bylaws or corporate governance guidelines requiring that a director not receiving such a majority submit his or
her resignation to the Board or one of its committees. The resignation policy or bylaw is designed to deal with
the typical state law provision that provides that a director remains in office until his successor is elected, even if
the director has not received a vote sufficient for re-election (a “holdover director”).
The Governance and Nominating Committee and the Board of Directors have carefully considered the
arguments for and against a majority vote standard. The plurality standard provides greater certainty that the
annual election will result in a full and duly elected board of directors. However, the Board also recognizes that
requiring a majority of the votes cast insures that only directors with broad acceptability among the voting
shareholders will be seated on the Board and enhances the accountability of each Board member to the
shareholders. Therefore, the Board has concluded that the majority vote standard and the director resignation
provisions would be in the best interest of the Company.
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Proxy Statement