Under New York Stock Exchange Rule 452, certain matters to be voted on at board meetings of NYSE member organizations were designated as “Broker May Vote” by the NYSE in its weekly bulletin, meaning that brokers could vote customer shares on the proposals, provided that they had not received customer instruction regarding the vote. Examples of proposals that were previously ruled “Broker May Vote” include:
- de-staggering the board of directors;
- majority voting for director elections;
- elimination of supermajority voting requirements;
- providing for the use of consents;
- providing rights to call a special meeting; and
- some anti-takeover provision overrides.
On January 25, 2012, the NYSE announced that, going forward, matters which would have previously be designated “Broker May Vote” will instead be designated “Broker May Not Vote.” The NYSE cites “recent congressional and public policy trends disfavoring broker voting of uninstructed shares” as a cause for the change. The NYSE also notes that in 2010 Rule 452 was amended to prohibit most broker votes for the election of directors. The Dodd-Frank Act went further, prohibiting broker voting in the election of directors and on matters relating to executive compensation.
Check back frequently at dodd-frank.com for continuing coverage of the Dodd-Frank Act and its impacts.
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