There is nothing personal about Gerald Armstrong's campaign for annual elections for all directors at Commerce Bancshares in Kansas City, Mo.
In fact, the longtime activist investor said in an interview Monday he regards $24 billion-asset Commerce as well-run, adding that if the company ever opened a branch closer to his home in Denver, he would consider becoming a customer. (Commerce has two branches in metropolitan Denver.)
Armstrong, however, is a strong proponent of annual elections, waging proxy battles at several companies in recent years. At Commerce, he unsuccessfully petitioned shareholders three other times before prevailing at this year's annual meeting.
The proposal, urging the company to take the "necessary steps to cause the annual election of shareholders," attracted 64% of the 70.1 million voting shares. That was a significant improvement from his last effort, in April 2012, which received 46% backing from the nearly 67 million shares voted.
For Armstrong, annual elections make boards more accountable. Commerce's practice has been to stagger elections, dividing directors into three classes so that only a third faced a vote in any given year.
Armstrong's proposal was essentially identical to the one he floated in 2012, but it attracted 14 million more shares this time around.
"The credit has to go to the institutional investors," he said. "They're behind this more than ever before."
While Armstrong's proposal was non-binding, Charles Kim, Commerce's chief financial officer, wrote in an email Tuesday that the company is taking the vote seriously. Commerce plans to include a formal measure to declassify director elections in next year's proxy. If it passes, Commerce would phase-in annual elections over a three-year period.
Corporations have long viewed staggered elections as an effective defense against unwanted takeover overtures. But as shareholder activism has grown increasingly commonplace, the practice has gone into decline. In 2002, about 60% of companies staggered elections, according to the Conference Board. A decade later, the percentage had dropped below 50%.
The efforts of activists like Armstrong continue to push it lower.
Although Armstrong has filed dozens of shareholder resolutions over the years, he isn't anti-corporation. A former corporate executive himself, Armstrong served as president of Rocky Mountain Fuel Co. from 1973 to 2006. Armstrong, who bought his first stock in the late 1960s, has invested on a full-time basis since retiring in 2006.
Armstrong has spearheaded several successful proxy campaigns. In what is probably his most notable effort, he secured support in 2012 for a non-binding proposal to split the chairman and chief executive roles at KeyCorp in Cleveland, receiving 54% of the roughly 723 million shares voted. Still, Key's board opted to enhance the role of its lead director, allowing Beth Mooney to keep both posts.
Armstrong is pressing a similar campaign at UMB Financial, also of Kansas City. He plans to present a proposal at the $17.5 billion-asset company's April 28 annual meeting that would direct the board to split the chairman and CEO roles, which are held by Mariner Kemper.
Armstrong said Monday he is hoping the momentum from his Commerce victory carries over to UMB. A similar measure at the 2014 annual lost badly, receiving just 15% of the 38.8 million shares voted.