On May 7, 2008, Governor Sonny Perdue signed Senate Bill 436 into law. Senate Bill 436 allows, among other things, for the bylaws of a publicly traded corporation incorporated under the laws of Georgia to set a director voting standard greater than the plurality standard contained in Georgia Code Section 14-2-728. Prior to the passage of Senate Bill 436, a corporation wishing to have a voting standard different than the standard contained in Georgia Code Section 14-2-728 had to specify the differing voting standard in the corporation's articles of incorporation. Senate Bill 436 allows public corporations to change to a majority voting standard without having to seek shareholder approval, a step which is required when amending articles of incorporation and which can be extremely costly for public corporations.
In the last several years, an increasing number of public corporation shareholders have encouraged a majority voting standard for the election of directors based in part on concerns that plurality standards allow directors to be elected without receiving convincing shareholder support. That is, under a plurality standard, a director nominee need only receive more votes than other director nominees; in contrast, a majority voting standard would require a director nominee to receive more votes in support than votes in opposition. With the passage of Senate Bill 436, publicly traded Georgia corporations may now more easily switch to the majority voting standard by merely amending its bylaws, a change which may require only the consent of the board of directors.
In addition to changing the director voting requirements, Senate Bill 436 allows directors to tender resignations effective upon the occurrence of a specific event (i.e. lack of shareholder approval of the director's nomination). Under prior Georgia law, such resignation had to be effective upon its receipt or upon a date certain. In combination with the changes to the director voting requirements, this change to Georgia law provides Georgia public corporations flexibility to adopt policies relating to director elections, including policies requiring directors to tender resignations that become effective if the vote for the director does not meet a specified standard.
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