On February 26, 2009, the New York Stock Exchange fi led with the Securities and Exchange Commission a proposed amendment to NYSE Rule 452, Giving Proxies by Member Organizations, that would eliminate broker discretionary voting in the election of directors.1

Under current proxy rules, brokers are required to deliver proxy materials to benefi cial owners and request that benefi cial owners provide voting instructions. If brokers have not received voting instructions by the tenth day preceding the meeting date, Rule 452 allows brokers to vote uninstructed shares on certain matters which the NYSE considers to be “routine.”

Uncontested director elections are currently considered by the NYSE to be “routine” matters on which brokers are permitted to cast discretionary votes. The proposed amendment to Rule 452 would add director elections to the list of items identifi ed by the NYSE as “non-routine,” thereby eliminating broker discretionary voting in the election of directors.

The proposed amendment is likely to increase the costs of uncontested elections, as issuers may have to expend more money and effort to reach shareholders who previously did not vote to establish quorums at shareholder meetings. These costs may increase substantially with the rise of majority voting for directors, as issuers will have to obtain votes from shareholders who may not realize that their failure to vote constitutes a “no” vote. The NYSE believes that these increased costs and diffi culties are necessary to ensure better corporate governance and transparency in the director election process.

The proposed amendment must be approved by the SEC before it takes effect and will be the subject of a public comment period following publication in the Federal Register. If approved by the SEC on or before August 31, 2009, the proposed amendment will be applicable to shareholder meetings held on or after January 1, 2010. If the proposed amendment is approved by the SEC after August 31, 2009, its effective date will be delayed to a date which is at least four months after the approval date (and which does not fall within the fi rst six months of the calendar year). The proposed amendment will not apply to companies registered under the Investment Company Act of 1940.