Home Depot Sets Standard for Election of Directors

August 28, 2006  by in UnCategorized   

By Home Furnishings Business in on August 2006 The Home Depot will adopt a majority vote standard for the election of its board of directors beginning with the next election in May.

“Listening to our shareholders, learning from their feedback and maintaining ongoing dialogue are top priorities for The Home Depot,” said Bob Nardelli, chairman, president and chief executive officer. “At our shareholder meeting in May, the majority vote proposal was approved by 56 percent. By adopting a majority vote standard, the board of directors is reinforcing our company’s commitment to shareholder engagement and director accountability.”

The majority vote standard requires each director to receive a majority of the votes cast with respect to that director, providing for a greater level of accountability of directors to shareholders. Previously, directors were elected under a plurality vote standard, which meant that the candidates receiving the most votes would win without regard to whether those votes constituted a majority of the shares cast at the meeting. Contested elections will continue to use the plurality vote standard.

Under the laws of Delaware, where The Home Depot is incorporated, if an incumbent director is not elected, that director continues to serve as a “holdover director” until the director’s successor is duly elected and qualified. To address this potential outcome, the board has also adopted a director resignation policy in the company’s bylaws. If an incumbent director is not elected by a majority of the votes cast, the director shall offer his or her resignation to the board. The Nominating and Corporate Governance committee would then make a recommendation to the board on whether to accept or reject the resignation, or whether other action should be taken. The board would then disclose its decision within 90 days after the certification of the election results.