Big Lots 2008 Annual Report Download - page 63

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well-suited for the vast majority of director elections in which only board nominated candidates are on the ballot.
We believe that a majority vote standard in board elections would establish a challenging vote standard for board
nominees and improve the performance of individual directors and entire boards. The Company presently uses a
plurality vote standard in all director elections. Under the plurality standard, a board nominee can be elected with
as little as a single affirmative vote, even if a substantial majority of the votes cast are “withheld” from the nominee.
In response to strong shareholder support for a majority vote standard, a strong majority of the nation’s leading
companies, including Intel, General Electric, Motorola, Hewlett Packard, Morgan Stanley, Home Depot, Gannett,
Marathon Oil, and Pfizer, have adopted a majority vote standard in company bylaws or articles of incorporation.
Additionally, these companies have adopted director resignation policies in their bylaws or corporate governance
policies to address post-election issues related to the status of director nominees that fail to win election.
Other companies have responded only partially to the call for change by simply adopting post election director
resignation policies that set procedures for addressing the status of director nominees that receive more
“withhold” votes than “ for” votes. At the time of this proposal submission, our Company and its board had not
taken either action.
We believe that a post election director resignation policy without a majority vote standard in company
governance documents is an inadequate reform. The critical first step in establishing a meaningful majority vote
policy is the adoption of a majority vote standard. With a majority vote standard in place, the board can then take
action to develop a post election procedure to address the status of directors that fail to win election. A majority
vote standard combined with a post election director resignation policy would establish a meaningful right for
shareholders to elect directors, and reserve for the board an important post election role in determining the
continued status of an unelected director. We urge the Board to initiate the process to establish a majority vote
standard in the Company’s governance documents.”
Board of Directors’ Statement in Opposition to Shareholder Proposal
After careful consideration, the Board recommends a vote AGAINST the shareholder proposal because:
• we have already adopted a majority vote policy that addresses the proponent’s concerns;
• we have a history of electing highly qualified directors by a substantial majority;
• we have strong corporate governance practices;
• the shareholder proposal may adversely impact us; and
• the shareholder proposal creates uncertainty.
We Have Already Adopted a Majority Vote Policy
The shareholder proposal requests that we adopt a voting standard for director elections that differs from the
plurality voting standard, the current default standard under Ohio law. We are incorporated in Ohio and, subject
to our majority vote policy discussed below, our shareholders elect our directors by plurality voting. Under the
plurality voting standard, the nominees who receive the most affirmative votes are elected to serve as directors.
The Board is cognizant of recent developments with respect to majority voting in director elections. In fact, to
address concerns presented in the shareholder proposal, we adopted a majority vote policy as part of our Corporate
Governance Guidelines, which can be found in the Investor Relations section of our website (www.biglots.com)
under the “Corporate Governance” caption. Our majority vote policy provides that, in an uncontested election, any
director nominee who receives fewer votes “for” his or her election than votes “withheld” from such election must
promptly tender his or her resignation from the Board. In such a case:
• The Nominating/Corporate Governance Committee will promptly consider the resignation and
recommend to the Board whether to accept the resignation or to take other action.
• The Board will act on the recommendation of the Nominating/Corporate Governance Committee no
later than 100 days following the certification of the shareholder vote.
• We will promptly publicly disclose the decision of the Board in a press release or a report to the SEC.
• The director who tendered his resignation will not participate in the recommendation of the Nominating/
Corporate Governance Committee or the consideration of the tendered resignation by the Board.