Commentary By O'Melveny's Toton and Heyduk on NYSE Notice Governing Broker Nonvotes Cited by TheCorporateCounsel.net
A recent client alert issued by O'Melveny Corporate Finance/Capital Markets counsel Rebekah Toton and Shelly Heyduk that analyzes the impact of recent New York Stock Exchange (NYSE) rule changes was extensively quoted in a recent article on
TheCorporateCounsel.net.
The NYSE recently issued new rules prohibiting voting by investment brokers on certain proposals related to corporate governance matters. In an article posted on January 26, 2012, "Broker Nonvotes: NYSE Deems Group of Governance Proposals to Be "Non-Routine," the online news Web site covering issues relevant to corporate legal staffs and other lawyers cites examples of proposals covered by the rule changes offered by Toton, who is based in the Firm's Washington, D.C. office, and Heyduk, who practices in O'Melveny's Newport Beach office.
The article quotes the following passage from the client alert,
"NYSE Limits Broker Voting on Corporate Governance Proposals, written by Toton and Heyduk:
"One practical implication of the NYSE's new position is that companies may face increased difficulty in obtaining the necessary support for these governance proposals. This could especially impact companies seeking support for proposals requiring approval of a majority (or greater) of the shares outstanding, such as proposals seeking to amend the certificate of incorporation to implement a specified corporate governance change (for example, board declassification or the right of shareholders to act by written consent).
"On these proposals, the resulting broker non-votes will have the effect of votes against the proposal. Companies seeking support for proposals that are subject to a typical default vote standard (such as the default Delaware standard of a majority of the shares represented and entitled to vote on the matter or a majority of the votes cast standard) may also feel an impact from this change because brokers who historically voted uninstructed shares in accordance with management's recommendation (whether on an absolute or proportional basis) will no longer be permitted to exercise discretion to vote uninstructed shares in favor of these proposals. The impact will be more severe for companies with governing documents (or subject to state laws) requiring supermajority approval for revisions of the specified governance provision in their certificate of incorporation or bylaws."
January 26, 2012
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