SEC Eliminates Broker Votes On Directors; Agrees To Release Proposals On Exec. Comp., Proxies

At an open commission meeting yesterday (July 1), the U.S. Securities and Exchange Commission voted to release for public comment proposed rules relating to Shareholder Approval of Executive Compensation of TARP Recipients, and Proxy Disclosure & Solicitation Enhancements. There will be a 60-day comment period on the proposals, which are described further in this SEC press release.

Additionally, the SEC voted to approve an NYSE proposal that would eliminate broker discretionary voting for all elections of directors, whether contested or not. Currently, NYSE Rule 452 and corresponding Listed Company Manual Section 401.08 permit brokers to vote on behalf of their beneficial owner customers in uncontested elections of directors if the customers have not returned voting instructions. As noted in the SEC press release, “The NYSE’s proposal will apply to shareholder meetings held on or after Jan. 1, 2010. The SEC’s approval order will be published in the Federal Register and posted on the SEC Web site as soon as possible.”

Statements made at the July 1 open commission meeting currently posted on the SEC website y include those of: SEC Chairman Mary L. Schapiro, Commissioner Luis A. Aguilar, Commissioner Troy A. Paredes, Commissioner Elisse B. Walter, and remarks of Corp Fin staffers John Harrington and Sean Harrison describing the proposed rules on Exec. Comp. and Proxy Solicititations, respectively.

For color commentary, see Live Blogging SEC Meeting On Pay by Michelle Leder of Footnoted.org, The Big Kahuna: SEC Approves NYSE's Elimination of Broker Discretionary Voting , by Broc Romanek in The Corporate Counsel.net Blog, A Momentous Day For Investors by Ted Allen in Risk Metrics Group's Risk and Governance Blog, and A Trinity of Issues for the SEC by Tom Quaadman in the U.S. Chamber of Commerce's ChamberPost Blog.

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