Last month, the SEC voted to exclude broker votes from all director elections starting 1st January 2010. Earlier this year Bank of America announced that BoA’s beleagured CEO, Ken Lewis had won his seat “with 67 percent of the votes cast”. But, this announcement did not provide a detailed breakdown of how all the votes were cast (as is now standard in the UK, Europe and Australia) and, very importantly, the result included the broker votes which generally go in favour of management.
Although Friday’s filing doesn’t say how many broker votes were cast in favor of Lewis, it does list how many broker votes were excluded from the eight shareholder proposals proposed to the meeting (1,641,844,810), which gives us a reasonable proxy for the the possible number of broker votes cast for the directors.
On the new “broker vote excluded basis” Lewis would have only received 52 percent of votes cast (versus the 67 percent announced by the company at the time) and former lead director Temple Sloan would have received about 46 percent of votes cast, less than a majority. Sloan subsequently stepped down from the board in May as part of a board restructuring.
The double reform for prompt voting results and elimination of broker votes is a welcome addition to increased market transparency. Expect to see an upswing in campaigning from weaker board candidates next proxy season as their fig leaf of broker vote respectibility is whisked away.