Today, National Legal and Policy Center presented a “Stockholder Proposal Requesting the Adoption of Cumulative Voting” at the annual meeting of Salesforce, Inc.
Board elections are usually conducted on a majority voting basis, and shareholders can only vote “yea” or “nay” for each member across the entire slate. That means that a coalition representing 51% of shareholders can effectively control 100% of board seats. Cumulative voting would allow investors to aggregate their votes so that representation would be proportional to ownership. In theory, if you own 50% of the company, you would get to elect 50% of the board.
Salesforce’s board opposed the proposal, as explained on page 130 of the company’s proxy statement. NLPC responded to the board’s opposition statement in an exempt solicitation report circulated to Verizon’s shareholders.
Presenting the proposal was Paul Chesser, director of NLPC’s Corporate Integrity Project. His three-minute remarks can be heard here, and a transcript follows:
I’m Paul Chesser of National Legal and Policy Center, the proponent of Proposal 6.
The proposal asks the board to adopt cumulative voting for the election of directors.
This reform matters at Salesforce now because Marc Benioff (pictured above) has served as Chair, Chief Executive Officer, and co-founder of this Company since 1999.
Twice in seven years, he attempted to share executive authority through co-CEO arrangements.
Both ended in less than two years.
The board ratified each appointment, ratified each departure, and these exercises produced no structural change in response.
Mr. Benioff’s most recent intended successor went on to co-found a startup that now competes in the same agentic-AI market Salesforce is aggressively pursuing.
These governance failures arrive at a difficult moment for the Company.
Salesforce stock has declined substantially from its peak.
Wall Street has begun to question whether artificial-intelligence agents will displace the business model that Salesforce pioneered.
The Company has responded with a large buyback program, financed in part with debt, yet the market has not been reassured.
Shareholders have already discovered the limits of the current voting structure.
Three years ago, five of the most prominent activist investors in the country took simultaneous positions in the Company.
The episode produced two new directors and a negotiated truce, but no lasting structural reform.
Cumulative voting offers a more promising potential for meaningful change.
It allows shareholders to aggregate their votes for individual director candidates rather than spreading those votes across an entire slate.
The Securities and Exchange Commission has observed that the practice strengthens the ability of minority shareholders to elect a director.
Institutional Shareholder Services has often recommended voting in favor of cumulative voting proposals.
The reform allows shareholders to translate economic ownership into boardroom representation, without the need for a bruising proxy campaign.
Cumulative voting does not guarantee any particular outcome.
It restores balance to a process that has not always served all owners of this Company equally.
For these reasons, National Legal and Policy Center urges our fellow shareholders to vote FOR Proposal 6.
Thank you.
All assertions made by Chesser in his above remarks are footnoted and can be found in NLPC’s exempt solicitation report, here. An executive summary of the report can be viewed here.
Read NLPC’s shareholder proposal for the Salesforce annual meeting here.
Listen to Chesser’s presentation of the proposal at the meeting here.
