Director Voting: A Key Lever For Investor Stewardship

Shareholder proposals – a crucial lynchpin of shareholder advocacy – are under attack, and investors need to respond with new and improved strategies. This will likely include a renewed emphasis on director voting, the subject of a new Majority Action briefing. 

Just this week, the SEC announced that in the coming proxy season it will not issue opinions on companies’ requests to exclude shareholder proposals from their proxy statements, unless the company is claiming the proposal is not a proper subject for action by shareholders under state law. The SEC is abdicating its responsibility to enforce its own rules, effectively leaving it up to corporations to decide which proposals deserve a vote and threatening decades of hard-won progress by asset owners. This week’s announcement builds on an inflammatory speech last month from SEC Chairman Paul Atkins, which argued that because environmental and social shareholder proposals are “precatory” – that is, non-binding – then the majority of companies should be able to exclude those proposals from their ballots as improper subjects for shareholder action under Delaware law. 

And both moves should be seen in the context of an ongoing attack on shareholder proposals. In September, a new law came into effect in Texas which could drastically raise the requirements for investors to submit a shareholder proposal: It allows companies to adopt a bylaw requiring shareholders to own at least $1 million in market value or three percent of the company’s voting shares, among other requirements, in order to submit a proposal. This follows on Exxon’s lawsuit against two of its investors last year, an egregiously aggressive step to deter shareholders from submitting proposals. 

In sum, recent actions by key players, from SEC leadership to states and corporations, are generating serious uncertainty around the viability of shareholder proposals broadly. Proposals are vital, and we are encouraged that the investor community is coming together to defend them. But in the shareholder advocacy toolbox, proposals are not the only tool for accountability. It is therefore natural that director votes are seeing renewed interest from investors as we approach the spring 2026 proxy season. In fact, even Atkins is spotlighting director votes – as he said in his Delaware speech last month, “we must de-politicize shareholder meetings and return their focus to voting on director elections and significant corporate matters.” 

Majority Action’s new briefing offers an overview of director voting as a stewardship lever. Through director votes, investors effectively define what constitutes acceptable corporate governance and risk management across a range of issues, from climate change to responsible technology use. On any given issue, votes against directors can be used to signal investor dissatisfaction with corporate strategy and performance.

Take an investor who holds shares in an electric utility that is reneging on its net-zero commitments by building new, expensive gas-fired power plants. Organizing a “Vote No” campaign against the chair of the environmental committee could influence the company to meet growing demand through renewables and storage instead of fossil fuels. 

In a similar vein, consider the example of PPL Corp., which by 2021 was one of the only investor-owned utilities not to have committed to net zero carbon emissions by 2050. Chairman Craig Rogerson received just 78% support in his 2021 bid for re-election. The company set a net-zero target soon after. 

As our briefing details, investors can amplify their votes through tools like pre-declarations, exempt solicitations and rationales. For asset owners, one of the highest return-on-investment tools is engaging their asset managers on key director elections. 

Majority Action has been working with investors for years to strengthen their director voting

policies and practices, and provides a range of related resources, including annual director vote recommendations based on performance on key issues in climate-critical sectors, sample proxy voting policy language, and annual reviews of the largest asset managers’ performance on climate director votes in our Climate in the Boardroom series.