Proponents of a majority vote requirement for the election of directors often decry the fact that under a plurality vote standard, a director can win with a single vote. For example, the 2015 proxy statement of Nabors Industries Ltd. included the following argument by the Massachusetts Laborers' Pension Fund in support of its majority vote proposal:
Under the plurality vote standard, a nominee for the board can be elected with as little as a single affirmative vote, even if a substantial majority of the votes cast are "withheld" from the nominee.
However, does this argument really hold water?
To be elected under a majority vote standard, the number of votes cast “for” the nominee must exceed the number of votes cast “against” that nominee. Thus, it is entirely possible under a majority vote standard for a nominee to be elected by a single vote (e.g., 5,000,001 votes are cast for her election and 5,000,000 are cast against her election). Thus, the idea that a majority vote standard prevents election by a single vote is specious.
While it is theoretically possible under a plurality vote system for a nominee to be elected with only one affirmative vote, that outcome would be highly unlikely for a publicly traded company. With a majority vote rule, it is also possible, although also highly unlikely, for a director to win with only a single affirmative vote. For example, an election my result in the following tally: 1 vote for, 0 votes against, 10,000,000 abstentions and broker non-votes. Thus, the fact that a nominee may be elected by a single affirmative vote even if a substantial majority of votes are withheld the nominee does not distinguish majority voting from plurality voting.
The effect of so-called "withheld votes" also does not distinguish a majority vote rule from a plurality vote rule. Under a majority vote rule, abstentions and broker non-votes are typically not counted as votes "cast" and hence they do not affect the outcome. A plurality vote rule only looks at the number of votes for a director. Hence abstentions and broker non-votes also have no effect on the outcome.
