Board Members Who Collected Big Withhold Votes–and Why
from January/February 2006
The 10 directors here and on the following pages were all reelected with a majority of votes in 2005. But shareholders still weren’t that happy with them, or with about 50 other directors who won by less than overwhelming margins.As the captions show, some were on staggered boards, and since it was their year to run for reelection, they took the rap for all their peers who’d jointly signed off on an unpopular board decision, such as a failure to rescind a poison pill. Others were singled out, usually because shareholders felt that their business relationships kept them from being truly independent of
the company. The reasons for withholding votes given here are based on recommendations that Institutional Shareholder Services (ISS) made to shareholders.
Mario M. Rosati, 59
Partner, Wilson Sonsini Goodrich & Rosati
Palo Alto, California
Board: Sanmina-SCI Corp.
Advising shareholders to withhold their vote for Rosati, ISS called this audit committee member an affiliated outsider because his firm provides legal services to the company.
Marvin L. Mann, 71
Chairman, Independent Trustees of Fidelity Funds
Boston
Lexmark International Inc.
His past service as chairman and CEO of Lexmark (1991-98) makes Mann an affiliated outsider and means that he shouldn’t sit on the finance and audit committee—which he does.
James H. Berick, 72
Attorney
Cleveland
MBNA Corp.
His former law firm, where his son works, does business with MBNA. Shareholders also withheld 41.4% of their votes from director Benjamin Civiletti, 70, whose law firm does work for the company too.
B. J. McCombs, 77
Private Investor
San Antonio, Texas
Clear Channel Communications
McCombs, a member of the compensation and nominating committees, is a co-founder of Clear Channel and therefore not independent.
Clarence P. Cazalot Jr., 55
President and CEO, Marathon Oil Corp.
Houston
Baker Hughes Inc.
ISS cited poor attendance by Cazalot and fellow director J. Larry Nichols, 63. Both missed about 30% of the board and committee meetings. Nichols got a 38.5% withhold vote.
Linda Koch Lorimer, 53
Vice President, Yale University
McGraw-Hill Cos.
She was one of the four directors up for reelection. All received withhold votes of over 30% because the board had ignored a 2004 shareholder proposal to repeal a poison pill.
Marc F. Racicot, 57
Former Partner, Bracewell & Giuliani
Houston
Burlington Northern Santa Fe Corp.
The former Montana governor’s old law firm does business with the railroad, which makes him an affiliated director. Vilma S. Martinez, 63, of Munger Tolles & Olson, got a 36% withhold vote for the same reason.
Frank Savage, 65
CEO, Savage Holdings LLC
New York City
Lockheed Martin Corp.
His son is a Lockheed Martin employee—enough for ISS to recommend a withhold vote. Shareholders are also wary because Savage himself was a director of Enron.
Joseph Neubauer, 63
Chairman and CEO, Aramark Corp.
Philadelphia
Verizon Communications
Board- and committee-meeting attendance for 10 of Verizon’s 11 directors averaged higher than 83% in 2004. Neubauer, the 11th, scored 71%, low enough so that ISS called for withholding votes.
Donald B. Rice, 66
Chairman and CEO, Agensys Inc.
Santa Monica, California
Wells Fargo & Co.
Family connections hurt three directors: Rice and Michael W. Wright, 66, have adult children working at the bank, and Cynthia Milligan, 58, a brother. Wright’s withhold vote was 26%; Milligan’s was 31%.
