NYSE Rule 452 Update

Early this year a committee called the “Proxy Working Group,” chaired by prominent Silicon Valley lawyer Larry Sonsini, was formed and empowered by the New York Stock Exchange to look at the exchange’s Rules 452 and 465, and the roles of proxy advisory firms like ISS and Glass Lewis, and make change recommendations if the committee saw fit to do so.   Of most pressing interest was 452, which in an uncontested shareholder meeting gives brokers the right to vote client shares in favor of management on “routine” proposals if the broker has not received instructions from the shareholder to the contrary 10 days prior to the meeting.   The Proxy Working Group, in light of much public sentiment that votes for directors should be considered “non-routine,” made this very recommendation — but also asked for general comment on the matter over this past summer.

The result of comments received was a recent decision to delay making director votes non-routine – at least through 2007.   According to Sonsini “The purpose of this is to allow companies additional time to prepare for implementation.”   So, the change would appear to be a done deal – but in 2008.

Stay tuned for more updates on the Proxy Working Group’s recommendations, regarding 452 and the other matters, on this web site.