Plurality voting: Meaning, Criticisms & Real-World Uses

What Is Plurality Voting?

Plurality voting is a voting system in which the candidate or option receiving the most votes wins, regardless of whether that total constitutes an absolute majority (more than 50%) of the total votes cast. Within the context of corporate governance, plurality voting is a common method for electing individuals to a board of directors or for approving certain corporate resolutions. This system prioritizes the candidate with the highest number of votes over the need for broad consensus, offering a straightforward and often swift resolution to voting processes.²⁷

History and Origin

The concept of plurality voting, often referred to as "first-past-the-post," has deep historical roots, particularly in English-speaking nations. It was the primary electoral system inherited by the United States from Britain and was the only democratic electoral system in existence from the 15th century until the 19th century.²⁶ While initially applied broadly in political elections, its principles naturally extended to organizational decision-making, including within corporations. For many decades, directors in most companies were elected by a plurality of the votes cast, meaning an uncontested candidate could win with just a single "for" vote.²⁵

Key Takeaways

Plurality voting elects the candidate or option with the highest number of votes, even if it's not a majority.
It is a simple and quick voting method, often used in corporate elections for boards of directors.
A key criticism is that the winning candidate may not have the support of the majority of voters.
In uncontested corporate elections under plurality rules, a nominee can technically be elected with minimal "for" votes.
Many companies have moved from strict plurality to majority voting or "plurality plus" systems to increase transparency and accountability.

Formula and Calculation

Plurality voting does not involve a complex formula or calculation beyond counting votes. The "winning" condition is simply:

V_{winner} > V_{candidate\_A} \text{ and } V_{winner} > V_{candidate\_B} \text{ and } \dots \text{ and } V_{winner} > V_{candidate\_N}

Where:

(V_{winner}) = Total votes for the winning candidate/option
(V_{candidate_X}) = Total votes for any other candidate/option X

The candidate with the highest (V) is the winner. This straightforward approach means that no complex weighted averages or thresholds beyond the highest vote count are typically involved.

Interpreting Plurality Voting

Interpreting the outcome of a plurality vote requires understanding that the winner has the most support, but not necessarily widespread support. In a corporate context, if a shareholder election for a new board member is conducted via plurality voting, the individual who receives the highest number of votes wins the seat. This means that a director could be elected without the approval of over half the voting equity shares.²⁴ This can be particularly relevant when there are many nominees or low voter turnout, potentially leading to a winner supported by a minority of the voting base. Boards and shareholder activism groups often evaluate these outcomes in terms of the underlying level of support or dissent expressed.

Hypothetical Example

Consider a hypothetical election for three seats on a company's board of directors. There are five candidates: Alice, Bob, Carol, David, and Emily. The company uses plurality voting. Assume 1,000 votes are cast.

Alice: 300 votes
Bob: 250 votes
Carol: 200 votes
David: 150 votes
Emily: 100 votes

In this scenario, Alice, Bob, and Carol would be elected to the three board seats because they received the highest number of votes among all candidates, even though none of them secured a majority (more than 500) of the total votes individually. This demonstrates how plurality voting allows a candidate to win without absolute majority support.

Practical Applications

Plurality voting is widely used in various settings, including political elections and, significantly, in public company corporate governance. Many U.S. companies continue to use plurality voting for the election of directors, especially in uncontested elections where the number of nominees equals the number of available seats.²³,²² Under this system, a director nominee needs only one "for" vote to be elected, provided a quorum is present.²¹

However, due to concerns about accountability, there has been a significant shift towards other methods. For instance, nearly 90% of S&P 500 companies now use some form of majority voting for uncontested director elections, a significant governance reform.²⁰ Despite this, thousands of U.S. companies, particularly smaller ones, still employ plurality voting.¹⁹ This method simplifies the election process within the company's corporate structure and in preparing documents like the proxy statement for the annual meeting.

Limitations and Criticisms

One of the primary criticisms of plurality voting is its potential to elect candidates who lack the support of the majority of voters.¹⁸ This can lead to what is sometimes called a "rubber stamp" process, particularly in uncontested corporate elections, where directors may be elected with minimal "for" votes, potentially undermining their accountability to shareholders.¹⁷ Critics argue that this system can entrench boards and, in rare instances, elect directors who do not have the confidence of a majority of the shareholders they are meant to serve with fiduciary duty.¹⁶

Another limitation is the encouragement of "tactical voting" or "strategic voting" in multi-candidate elections. Voters might not cast their voting rights for their most preferred candidate if they believe that candidate has no realistic chance of winning, opting instead for a less preferred but more viable candidate to prevent a highly disliked outcome.¹⁵ This can lead to election results that do not truly reflect the electorate's preferences. While this is primarily a concern in political elections, analogous situations can arise in corporate contexts where different factions or investor groups seek to influence outcomes.

To address these concerns, some companies have adopted a "plurality-plus" voting standard, where a director who receives more "withhold" votes than "for" votes must tender their resignation to the board. However, the board typically retains the discretion to accept or reject this resignation, meaning the director is still legally elected.¹⁴,¹³ This highlights that even with modifications, plurality voting can present challenges in ensuring full accountability and addressing potential risk management concerns related to board composition.

Plurality Voting vs. Majority Voting

The fundamental distinction between plurality voting and majority voting lies in the winning threshold.

Feature	Plurality Voting	Majority Voting
Winning Threshold	Candidate with the most votes wins, regardless of achieving over 50%.¹²	Candidate must receive more than 50% of the votes cast to win.¹¹
Default in US Cos.	Traditionally, it was the default for director elections.¹⁰	Increasingly adopted by larger companies; not the default in all states.⁹,⁸
Outcome Certainty	Guarantees a winner in a single round.⁷	May require multiple rounds of voting if no candidate reaches 50%.
Accountability	Criticized for potentially electing directors with less than majority support.⁶	Seen as enhancing director accountability to shareholders.⁵

The confusion between the two systems often arises because both involve counting votes to determine a winner. However, the requirement for an absolute majority in majority voting systems introduces a higher bar for success, ensuring that the elected individual or approved resolution has broader support from the voting base. Many company corporate by-laws have been amended to reflect a shift towards majority voting for director elections to align with investor expectations for increased accountability.

FAQs

Q: Is plurality voting used in all corporate elections?

A: No. While historically common, many large public companies have shifted to majority voting for director elections, especially in uncontested situations. However, thousands of companies, particularly smaller ones, still use plurality voting.⁴

Q: Can a candidate win with less than 50% of the votes under plurality voting?

A: Yes. Under plurality voting, the candidate who receives the highest number of votes wins, even if that number is less than 50% of the total votes cast. This is especially common in elections with more than two candidates.³

Q: What is a "withhold" vote in a plurality election?

A: In corporate elections using plurality voting, shareholders are often given the option to "withhold" their vote for a nominee. While this allows shareholders to express dissatisfaction, it generally has no legal effect on the election's outcome, unlike a vote "against" in a majority voting system.² It is fundamentally equivalent to an abstention.¹