Summary
Marriott International, Inc. (MAR) filed an 8-K on August 22, 2006, to report significant changes to its corporate governance structure. Effective August 16, 2006, the company eliminated its classified board structure and adopted a majority voting standard for director elections. These changes, approved by shareholders at the April 2006 annual meeting, aim to enhance shareholder voice and accountability.
Key Highlights
- 1Elimination of the classified Board of Directors structure, meaning all directors will be up for election annually starting in 2007.
- 2Adoption of a majority voting standard for uncontested director elections, where nominees must receive more 'for' votes than 'against' votes to be elected.
- 3Implementation of a director resignation policy: if a nominee is not elected, they must tender their resignation, which the Board will review and publicly disclose its decision within 90 days.
- 4These governance changes were previously approved by shareholders at the April 28, 2006 annual meeting.
- 5The company filed a Restated Certificate of Incorporation with the Secretary of State of Delaware to reflect these amendments.
- 6Conforming changes were also made to the company's Governance Principles.
Frequently Asked Questions
A classified board, also known as a staggered board, divides the directors into groups (classes), with only one class up for election each year. This structure can make it harder for shareholders to remove directors or effect changes. Marriott is eliminating its classified board so that all directors will be elected annually, giving shareholders a more consistent opportunity to vote on the entire slate.
In uncontested director elections, a nominee will now need to receive a majority of the votes cast (more 'for' votes than 'against' votes) to be elected. Previously, directors could be elected with a plurality, meaning they just needed more votes than any other single candidate, even if it was less than a majority of the total votes cast.
If a director who is already serving on the Board is not elected under the new majority voting standard, they are required to offer their resignation to the Board. The Nominating and Corporate Governance Committee will then review the resignation and recommend to the full Board whether to accept or reject it. The Board's decision will be made public within 90 days of the election results.
The amendments to the Certificate of Incorporation and Bylaws became effective on August 16, 2006. The elimination of the classified board structure means that the full Board will be voted on at the 2007 Annual Meeting of Shareholders.