NYSE Changes Policy Regarding Broker Voting of Uninstructed shares on corporate governance proposals

By Cydney Posner

As initially reported in thecorporatecounsel.net blog, the NYSE has sent out an information memo  relating to the application of Rule 452 to certain types of corporate governance-related proxy proposals. Rule 452 governs when NYSE members can vote without specific client instructions. (Remember that NYSE Rule 452 applies to all brokers who are members and, therefore, affects voting for all public companies, whether or not they are NYSE-listed.) Historically, the NYSE has allowed uninstructed voting for management-supported corporate governance proposals, but that approach has recently narrowed. Recent congressional and public policy trends disfavoring broker voting of uninstructed shares have now led the NYSE to shift its position under Rule 452: going forward, corporate governance proposals, such as proposals to de-stagger the board of directors, provide for majority voting in the election of directors, eliminate supermajority voting requirements, provide for the use of consents, provide rights to call a special meeting, and include certain types of anti-takeover provision overrides, will be treated as "Broker May Not Vote" matters.

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