October 25, 2006

NYSE Proposal: Eliminate Broker Voting Starting in 2008

Yesterday, the NYSE filed this proposal with the SEC to amend Rule 452 and eliminate broker discretionary voting for director elections (as such elections would no longer be considered “routine”) for any shareholder meetings held on – or after – January 1, 2008. The proposal is subject to approval by the SEC.

The NYSE’s proposal dovetails with a set of recommendations from its Proxy Working Group issued in June. Surprisingly, the proposal notes that the NYSE didn’t receive any comments on the Proxy Working Group’s recommendations (although the NYSE Staff only had solicited comments back in June to share with the SEC, not the public). Interesting that the NYSE acted so soon, given that it was reported that this proposal would be postponed just a month ago.

This proposal amplifies the stakes in the majority vote movement/shareholder access debate and will be discussed during our upcoming webcast: “Shareholder Access and By-Law Amendments: What to Expect Now.”

Survey: Compensation Committee Meetings/Disclosure Committee Meetings

As our perk survey continues, we have posted a new quick survey regarding meetings of the compensation committee and disclosure committee, including:

– In the wake of the SEC’s new compensation disclosure rules, our compensation committee has the following people attend their meetings

– Does someone from your independent auditor attend your disclosure committee meetings

– If someone from your independent auditor attends some or all of your disclosure committee meetings, does that person

– If someone from your independent auditor attends some or all of your disclosure committee meetings, what is the purpose for attendance

Please take a moment to participate in both these surveys.

NYSE’s Elimination of Annual Report Delivery: What to Do Now

As I blogged a few months back, the NYSE amended Section 203.01 of its Listed Company Manual regarding the provision of annual financial reports to shareholders. The amended rule is intended to allow listed companies to satisfy the NYSE’s annual financial statement distribution requirement by a website posting of a company’s Form 10-K (but this only benefits foreign private issuers until the SEC adopts e-Proxy and amends Rule 14a-3).

As a follow-up to its revised 203.01, the NYSE Staff recently issued this message:

“Companies have asked whether they can still satisfy the NYSE’s requirements by traditional physical delivery of the annual financial statements, without the necessity of making the website postings and simultaneously issuing a press release as provided for in the amended rule. The answer is yes.

As the NYSE stated in its rule filing with the SEC, the rule amendment was intended to “provide significant efficiencies to listed foreign private issuers exempt from the proxy rules under Exchange Act Rule 3a12-3.” The NYSE recognized in the filing that “the proposed rule changes will have minimal effect on domestic companies subject to the proxy rules”, and as noted above, the entire proposal was presented as a mechanism by which companies would be allowed to achieve compliance with NYSE requirements to provide annual financials to shareholders. Accordingly, the NYSE will deem companies that distribute annual financials to shareholders in compliance with the SEC’s proxy rules to be in compliance with the requirements of Section 203.01.”