Chevedden Director Tenure Proposal Fails at Costco

February 20, 2015

A shareholder proposal sponsored by activist John Chevedden aimed at limiting long-tenured directors at Costco failed by a substantial margin at Costco’s annual meeting this year. The proposal had asked the Costco board to amend the company’s bylaws to require at least 67 percent of the board of directors to have less than 15 years of tenure on the Costco board. Costco’s board had recommended against the proposal, noting that such a limit would “arbitrarily deprive Costco of qualified, experienced and effective directors.” According to a recent publication by the Institute of Corporate Directors on the topic of director tenure, “Term limits are a blunt tool and, without flexibility, they eliminate effective as well as noneffective directors.”

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