OR PHONE (866) 635-1838 for Bankruptcy Help, (866) 635-6190 for Divorce,
(866) 635-2689 for Personal Injury or (866) 635-9402 for Criminal Defense

Find a Local Lawyer

Close This Box!

• One amendment would require companies to provide new disclosure on internal pay disparity. Companies would have to disclose: the median annual total compensation of all employees, except the CEO; the annual total compensation of the chief executive; and the ratio of median total employee pay to that of the CEO.

• Another amendment would expand the agenda items where brokers may no longer cast uninstructed client votes. This provision would bar discretionary broker votes on the 'election of directors, executive compensation, or any other significant matter,' as determined by the SEC. It appears that the main impact of this provision would be on management-sponsored advisory votes on compensation. Current New York Stock Exchange rules prohibit discretionary broker voting on shareholder proposals and management-sponsored equity plans. Uncontested board elections were added to this list of "non-routine items" as of Jan. 1, 2010.

It is the latter requirement (Section 957 of the Bill) that is the most interesting.  The provision would amend Section 6(b) of the Exchange Act to require that "the rules" of the stock exchanges prohibit discretionary voting by "members" for any "election of a member of the board of directors of an issuer, executive compensation, or any other significant matter, as determined by the Commission, by rule." The provision has a number of implications. First, voting in these sorts of matters is currently regulated under Rule 452 of the NYSE.  Thus, it applies only to members of the NYSE.  The amendment, however, would extend the voting restrictions to members of all exchanges, including Nasdaq.  In short, it would, for the first time, apply these restrictions on discretionary voting to brokers who were not members of the NYSE. Second, the provision essentially federalizes what had otherwise been a discretionary rule of the stock exchange.  Voting restrictions on street name shares had historically been left to the NYSE.  This bill dictates some of the restrictions.  More importantly, however, it gives the SEC direct authority to prohibit voting on any other "significant matter."  If adopted, therefore, voting restrictions will cease to be the exclusive prerogative of the NYSE and instead be left to the discretion of the Commission.  The amendment, therefore, reflects another significant assertion of the SEC directly into the corporate governance process.