Vote to Decide Fate of Goodyear Board

Bowing to investor pressure, Goodyear Tire & Rubber Co will allow shareholders to decide whether its board of directors should stand for election every year, rather than in staggered, three-year terms, the Akron Beacon Journal has reported. That move would give shareholders the power to vote out the whole board in one go, rather than decide the fate of a minority of directors each year.

The proposal is something of a U-turn for Goodyear’s board of directors. In 2002 and 2001, the board fiercely resisted two moves by shareholder groups to have all directors stand for election every year, claiming such a step could make the company vulnerable to abusive takeover tactic, disrupting board stability. Many shareholders, however, argued that annual elections foster accountability, the newspaper reports. Shareholders will decide the measure at the company’s annual meeting on 26 April, according to a preliminary statement filed with the Securities and Exchange Commission. The measure will only need a simple majority to pass.

Currently, only about one-third of the 11-member board comes up for re-election each year. That allows about two-thirds of the board to remain in place from year to year, each serving in separate, three-year classes.
A Goodyear spokesman declined to say why the board had apparently changed its mind on the issue.
The proxy statement said: “The board is mindful a majority of shares voting on the non-binding declassification proposals in 2001 and 2002 voted in favour of those proposals. In addition, the board acknowledges that there are valid arguments against classified boards.”