The New York Stock Exchange has proposed a list of items that eliminate broker discretionary voting in certain types of corporate governance proxy proposals.

NYSE Rule 452 allows brokers to vote on “routine” proposals if the beneficial owner of the stock hasn't provided specific voting instructions to the broker at least 10 days before a scheduled meeting. In the past, NYSE has ruled certain corporate governance proposals as “Broker May Vote” matters for uninstructed customer shares when the proposal in question is supported by company management.

Going forward, the NYSE announced on Jan. 25 that matters previously designated as “Broker May Vote” will now be designated “Broker May Not Vote.” 

Examples of proposals that NYSE previously ruled as “Broker May Vote” include:

de-staggering the board of directors;

majority voting for director elections;

elimination of super-majority voting requirements;

providing for the use of consents;

providing rights to call a special meeting; and

some anti-takeover provision overrides.

The NYSE said in its Memo that the change is due to “congressional and public policy trends disfavoring broker voting of uninstructed shares.” For example, Rule 452 was amended in 2010 to prohibit brokers from voting uninstructed shares in director elections.

In addition, the Dodd-Frank Act went one step further by not only prohibiting brokers from voting uninstructed shares in director elections, but also on matters relating to executive compensation.