Shareholders of Bethlehem, Pa.-based are being askedto vote on a proposal that would eliminate cumulative voting in directorelections, according to its proxy form filed April 1.
The proxy form said cumulative voting allows shareholders tomultiply the number of shares they are entitled to vote by the total number ofdirectors to be elected. Shareholders are then able to cast the entire numberof such votes for one candidate or to distribute them among two or morecandidates. Non-cumulative voting restricts each common share to one vote; ashareholder may only cast a number of votes for each nominee up to the totalnumber of shares held by the shareholder.
Under non-cumulative voting where three directors are to beelected, a shareholder holding 100 shares could vote up to 100 shares for eachdifferent nominee. Under cumulative voting, the same shareholder could cast 300votes for one director, or split up the votes among the three candidates.
The board is attempting to make the change to voting becauseit believes cumulative voting could allow shareholders to influence the outcomeof an election in a manner disproportionate to their ownership interest.Shareholders who have less than a majority of shares have the ability toinfluence the outcome of director elections; the proxy mentions that a minoritygroup of shareholders that has cumulatively voted their shares may have specialinterests that run contrary to the broader group of shareholders. The changecould make a proxy contest more difficult, but the proxy said the proposal isnot part of antitakeover measures or in response to any shareholder effort toremove directors or gain control of the company.
The board of directors recommended shareholders vote for theproposal.