The Securities and Exchange Commission plans to address the long-awaited New York Stock Exchange's "broker vote" rule at an open meeting on July 1.
The NYSE has proposed to amend exchange Rule 452 to remove uncontested director elections from the list of routine matters where brokers can vote client shares if they don't receive voting instructions within 10 days before an annual meeting. Most activist investors support the rule change and argue that these discretionary broker votes, which typically are cast for management nominees, can dampen the impact of "vote no" campaigns. For instance, labor investors contend that two Citigroup directors would not have received majority support at the company's April 21 meeting without the help of broker votes.
According to the agenda for the SEC meeting, the commission also will discuss whether to propose new disclosure rules on corporate governance and compensation matters. SEC Chairman Mary Schapiro has called for companies to provide more disclosure on director qualifications and the firm's reasons for selecting its board leadership structure.
The agenda also includes a discussion of proposed rules for advisory votes on compensation at federally supported financial institutions.