NU Online News Service, June 9, 2004, 2:38 p.m. EDT – Shareholders of Prudential Financial Inc. voted overwhelmingly Tuesday to require that directors of the Newark, N.J., company be elected annually.[@@]
Members of the company’s board of directors have been elected every 3 years, on a staggered basis.
Prudential executives had urged shareholders to vote against the proposal, which is nonbinding.
The resolution was proposed by the Union of Needletrades, Industrial and Textile Employees Staff Retirement Plan, New York, an institutional investor that holds 14,000 shares of Prudential stock out of 528 million shares outstanding. A preliminary count showed the resolution was approved by 71% of the votes cast at the company’s annual meeting.
Prudential Chief Executive Art Ryan said after the vote that the board would consider the proposal.
The practice of electing one-third of a board’s directors each year is common at publicly held companies, but the UNITE resolution said eliminating the 3-year director election cycle would increase board accountability. “Increasingly, institutional investors are calling for the end of this system,” UNITE said in its resolution.
Opponents of the 3-year director election cycle include the California Public Employees Retirement System and the New York City and New York State pension funds, and several large companies have switched to annual director elections, UNITE said.
Before the vote, the Prudential board said the company and its shareholders decided when the company demutualized in 2001 to elect board members to staggered 3-year terms. The board “finds no compelling reason to change a board structure that was implemented and approved less than 3 years ago,” the board said.