A high level of withhold votes for corporate board nominees is a material indicator of investor concern with a specific company, according to a study released Thursday by the Investor Responsibility Research Center Institute.
Although only 5% of corporate directors who receive majority withhold votes are removed from boards, about 50% are unseated at companies with majority voting standards, the study found.
The study sample also indicated that half of withhold votes are ascribable to corporate-specific issues, and more than three-quarters of withhold votes can be ascribed to six main factors.
Four of these issues—poison pill adoption without shareholder approval, failed attendance, related party transactions and serving on too many boards—are considered violations of governance best practices.
The other two issues are concerns about company-specific compensation and discontent over board oversight of a company’s affairs. The remaining quarter of withhold votes are situational, with widely varying specifics.