On January 25, 2012, the NYSE released Informational Memo 12-4 which announced revisions to the applicability of Rule 452 to certain types of corporate governance proxy proposals. The change, which is effective immediately, will cause brokers who previously were able to vote their clients' uninstructed shares on certain corporate governance proposals, to no longer have the authority to do so.
Rule 452 governs how a broker may vote clients' shares without specific instructions from their clients. In the past, the NYSE deemed certain corporate governance proposals to be "routine" when they were supported by management, which allowed brokers to vote without client instruction.
The NYSE provided the following examples of the types of corporate governance proposals brokers will no longer be able to vote uninstructed shares on:
- de-stagger the board of directors
- provide for majority voting in the election of directors
- eliminate supermajority voting requirements
- provide for the use of written consent by stockholders
- provide for rights to call special meetings
- override anti-takeover provisions
The NYSE stated that the change in policy follows recent changes under NYSE rules and Dodd-Frank prohibiting brokers from voting uninstructed shares in the election of directors and on executive compensation, as well as public policy trends disfavoring broker voting of uninstructed shares.