Founded in 1969, NIRI is the professional association of corporate officers and investor relations consultants responsible for communication among corporate management, shareholders, securities analysts and other financial community constituents. The largest professional investor relations association in the world, NIRI’s more than 3,500 members represent 2,000 publicly held companies and $5.4 trillion in stock market capitalization.

Remember Me
Forgot Password

Members - Please be sure to click on your name to view more services after login is completed. If membership is about to expire, click on the red text to process your renewal.
Not a Member? Your Membership in NIRI entitles you to a wide range of services. Online Membership Join / Online Membership Join

[ close menu ]

This text is needed here for break to work!

Change and Frustration

Home
advocate
president's blog
Change and Frustration

The last change to NYSE Rule 452 was in 2010 when the SEC approved an amendment eliminating broker discretionary voting on director elections. New 452 changes surprised issuers last week when the NYSE implemented another change to Rule 452 eliminating discretionary broker voting on corporate governance matters without specific client instructions.

NYSE points to Washington as the reason for the move, “In light of these and other recent congressional and public policy trends disfavoring broker voting of uninstructed shares, the Exchange has determined that it will no longer continue its previous approach under Rule 452 of allowing member organizations to vote on such proposals without specific client instructions. Accordingly, proposals that the Exchange previously ruled as “Broker May Vote” including, for example, proposals to de-stagger the board of directors, majority voting in the election of directors, eliminating supermajority voting requirements, providing for the use of consents, providing rights to call a special meeting, and certain types of anti-takeover provision overrides, that are included on proxy statements going forward will be treated as “Broker May Not Vote” matters.”

While broker discretionary voting is still helpful in ensuring quorum at annual meetings (through auditor ratification for example), use beyond this function has been dramatically curtailed over the last few years. If you follow NIRI’s advocacy efforts, you will recall the SEC eventually plans to further examine proxy mechanics. Specific issues include considering improvements to shareholder communications, evaluating OBO/NOBO after decades of market evolution, efforts to improve retail investor voting and contemplating client directed voting. The SEC has put these ideas out for discussion but has not yet moved on any of them.

In my opinion, this latest 452 change shows the challenges in our regulatory system, not the least of which is that Dodd-Frank rulemaking is overwhelming the agenda. Regulatory actions that might create a better system between investors, companies and other market participants are being sidelined if not part of Dodd-Frank. In this case, the change was made without a public comment period – or a public SEC approval process. Issuers had no opportunity to make any public case regarding the change.

As your advocate, I want not only to share the news but also a bit of my frustration. I hope tomorrow will be a better day.

Until next week,

Jeff Morgan, FASAE, CAE
President & CEO
jmorgan@niri.org
www.twitter.com/jeffreydmorgan

This Post does not have any comments.

From:
Email:
To:
Email:
Subject:
Message:

National Investor Relations Institute

Change and Frustration