Companies that set up majority voting standards for board elections are more susceptible to activist vote-no campaigns against directors, according to Paul Hastings LLP partner Sean Donahue.

The activist defense adviser spoke on the latest Activist Investing Today podcast about nontraditional activist campaigns seeking to oust directors in uncontested elections, at special meetings and via written consent solicitations.

“You often see companies adopt things like majority voting that are viewed as institutional investor friendly,” Donahue said. “It’s a great thing to do and helps with institutions but it makes you more susceptible to a vote-no campaign.”

Companies with majority voting standards typically require directors who receive majority no votes in uncontested elections to submit resignation letters, though boards can, and often do, choose not to accept resignation letters. Alternatively, directors at companies with plurality vote standards don’t have to tender their resignation if they receive a majority negative vote because, with these systems, if one share votes in favor of the directors, they’re automatically elected.

Nevertheless, Donahue said it’s more difficult for a corporation to reject resignation letters from directors who receive majority no votes when they are faced with an activist’s vote-no campaign, when compared with other circumstances.

“It would be tougher for a board to make the decision to not accept a resignation if an activist had run a vote-no campaign and caused the majority voting to force the resignation, when compared to a situation where you get an ISS withhold recommendation because the company has governance issues,” Donahue said. “The activist would put a lot of pressure on the board to accept the resignation given they had taken all the time and effort to run a vote-no campaign and you didn’t accept the action.”

Check out the podcast with Sean Donahue:

More podcasts from The Deal are available on iTunes, Spotify and on TheDeal.com.