By Theo Francis

Oct. 8, 2019 7:00 am ET

For decades, elections for corporate boards carried little suspense. Most candidates ran unopposed and won by a landslide.

But board votes are no longer such a sure thing.

This year, 478 public-company directors failed to win the support of a majority of voted shares, up 39% from 2015, according to a new analysis from Broadridge Financial Solutions Inc., which processes proxy votes for companies, and consulting firm PricewaterhouseCoopers. 

A total of 1,726 directors failed to secure support from at least 70% of voted shares, according to the ProxyPulse report, produced jointly by the two companies. The analysis covered about 4,000 U.S. companies holding annual meetings between Jan. 1 and June 30, the peak period for board votes.

Despite the rise in rejections, only a fraction of directors were snubbed by shareholders: There were 22,520 directors who stood for election during this period in 2019. On average, directors won 95% of the vote, the study found.

At some companies, boards can choose to retain directors that fail to win majority support, but the practice is frowned on by investors. Increasingly, investors have sought rules requiring directors to win a majority of shares voted to retain their seats.

Most directors losing shareholder support aren’t at companies involved in proxy battles—in which activist investors seek to replace board members with candidates of their own, such as at Procter & Gamble Co. in late 2017 or at Arconic Inc. earlier that year. More typically, investors vote against incumbents without seeking to replace them directly.

Among the 500 most widely held public companies—which are generally also the biggest—50 directors failed to win a majority of shares voted in 2019, compared with 15 recorded in 2015. The number of directors failing to win at least 70% of the vote more than doubled to 170, from 69.

When directors lost shareholder support, it tended to reflect lack of confidence from institutional investors rather than individual shareholders, the analysis found. That is because small investors can more easily sell their shares if they don’t like a company’s practices, said Chuck Callan, Broadridge’s senior vice president for regulatory and corporate affairs.

“If they don’t like a stock, they’ll vote with their feet,” Mr. Callan said. By contrast, many institutional investors have little choice but to stay, in some cases because they manage index funds or other portfolios obliged to hold stakes in certain industries or companies.

Investors appear most likely to withhold support for members of board nominating and governance committees, said Paul DeNicola, principal of PwC’s Governance Insights Center. That likely reflects the increased interest among institutional investors in diversity and other board-composition issues.

In early 2018, for example, BlackRock Inc. —the world’s biggest asset manager—issued voting guidelines indicating that it expected boards to have at least two female directors.

Investors have avenues other than board votes to protest other kinds of concerns. Investors unhappy with executive-pay practices, for example, can vote down regular “say on pay” advisory votes over a company’s compensation program, Mr. DeNicola said.

Write to Theo Francis at