Note: This post was updated to reflect a change in the first table (Highest % Votes Against per Year). The original table incorrectly included Dynasil Corp of America as having the highest percentage of votes against in 2018.
An analysis of shareholder votes filed between January 1, 2016, and December 31, 2018, shows that, on average, roughly 98% of votes were cast in favor of auditor ratification. The remaining 2% is comprised of votes against auditor ratification (about 1.3%) and abstained votes (roughly 0.7%), increasing since our last analysis of auditor ratification votes. However, we found that 96 out of 100 times, fewer than 5% of votes were cast against the auditor.
The table below magnifies the results of the 1.3% of votes against auditor ratification over the past three years.
There were 7,815 ratification proposals, for example, in which the votes against ratification were between 0% and 1.00% of the total number of votes cast. In all, about 96% of auditor ratification proposals had 5% or less of the votes cast against ratification. On the other hand, shareholders of 32 companies had more than 25% of the total votes cast against ratification, none of which voting against exceeded 45.0%. (See table below.)
That said, sometimes shareholders – for whatever reason – vote in large numbers against the ratification of the auditor. Over the last three years, the largest percentage of votes against auditor ratification has remained right around 40%.
In 2018, there were twenty-one companies with more than 20% of votes against ratification. Dynasil Corp of America [DYSL], Amber Road, Inc. [AMBR], and MusclePharm Corp [MSLP] top this list, each having more than 36% of votes against auditor ratification.
The table below shows the top five companies with the highest percentage of votes against since 2014.
While shareholders’ votes carry advisory power, the Board of Directors is under no mandatory obligation to take voting results into consideration. All five companies listed in the table above, as well as Planet Fitness [PLNT] and Amber Road [AMBR] (from previous tables) have reappointed the auditor despite shareholder objections.
Keep in mind, this is a magnified analysis, as votes against ratification only comprise about 1.3% of the total votes.