In response to shareholder demands, online auction giant eBay has agreed to reduce a supermajority requirement and move toward board declassification.

In a press release this week, the California-based company said its board had amended its bylaws to drop the vote requirement for investors to amend bylaws from 66.6 percent to a majority of outstanding voting stock.

In addition, eBay said that the board's corporate governance and nominating committee has recommended that the board seek investor approval at its 2012 annual meeting to eliminate staggered board terms.

The company took these actions after the filing of shareholder proposals this year. Shareholder activist John Chevedden submitted a resolution to repeal the company's supermajority rules. Although management opposed the measure, the resolution received 64 percent support (based on votes cast "for" and "against") at the company's April 28 annual meeting.

The Nathan Cummings Foundation (NCF) also filed a declassification proposal at eBay, but later withdrew it. The NCF proposal is part of a broader 2011 campaign coordinated by the American Corporate Governance Institute, which also includes the Florida State Board of Administration. According to the institute, which is led by Harvard University professors Lucian Bebchuk and Scott Hirst, this campaign has resulted in seven S&P 500 companies passing charter amendments to declassify their boards, six S&P 500 companies agreeing to submit management declassification proposals for approval at their 2012 annual meetings, and passage of shareholder declassification proposals, with 82.2 percent average support, at nine S&P 500 companies. Overall, this campaign could result in a 15 percent decrease in the incidence of classified boards at large-cap companies, the institute said.
 
A significant number of S&P 500 firms have heeded shareholder demands to declassify since 2005, when 53 percent of those companies had staggered board terms. Currently, just 31 percent of S&P 500 firms have classified boards, and another 3.4 percent are in the process of moving toward annual elections for all directors, according to ISS data.