The New York Stock Exchange said last week that it would no longer allow brokers to vote shares whose owners had not provided instructions for company proxy measures dealing with governance. The move may make it harder for companies to win approval for such measures as declassifying the board of directors and adopting majority voting for director elections.
The restriction follows the exchange's 2010 prohibition against brokers voting such uninstructed shares in director elections, a change that at the time raised concerns that companies might fail to achieve quorum at their annual meetings. In fact, though, most companies were still able to achieve quorum on such plain-vanilla measures as ratification of the company auditor.
Steven Pantina, a managing director at proxy solicitation firm Georgeson, says "north of 95%" of companies ask shareholders to vote on the ratification of auditors. Since the NYSE continues to allow brokers to vote on such proposals, "the application of the rule generally won't have an effect on companies attaining quorum," he says.
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