Furon Switches to Majority Voting to Ward Off Raiders

Furon Co. shareholders Tuesday approved a change in how the company’s directors are elected, which will make it more difficult for a potential hostile raider to gain control of its board.

At the company’s annual meeting, shareholders approved the election of directors by majority vote rather than by cumulative vote, which had until recently been required by state law.

They also approved staggered terms for directors so just three or four members of the board will be elected at the same time, and increased the size of the board from nine to 10 members.

The changes were allowed under a new state law. The California Legislature last year adopted a law allowing majority voting for directors, a system under which directors are voted on individually and each shareholder can cast one vote per share.

Previously, California law required that corporations use cumulative voting, under which each shareholder received one vote per share, times the number of positions vacant. All these votes could be cast for a single candidate, thus allowing a minority of shareholders to elect a director by casting all the votes for one candidate.

Furon, which makes plastics products for industrial uses, said in its proxy statement that such a system could result in the election of directors who are “partisans of the particular interest group that elected them, rather than representatives of all shareholders.”

Furon chairman Peter Churm said the majority voting was simply “a better way for our shareholders” to elect directors. And the staggered terms for directors, he added, would provide for better continuity on the board.

Outsiders will have more problems taking control, because just a third of the board can be replaced in any given year.

Churm called the measures routine. The company said in its proxy that it knew of no effort by outsiders to elect candidates to the board.