At its open meeting last week, the SEC voted to propose amendments to the proxy rules under the Securities Exchange Act of 1934, as amended, that would (a) give effect to requirements that public companies receiving money from the Troubled Asset Relief Program (“TARP”) provide a shareholder vote on executive pay in their proxy solicitation relating to annual elections of directors, (b) require additional disclosure in the proxy materials of public companies regarding compensation and governance matters and (c) make other miscellaneous changes such as requiring faster reporting of election results. The SEC also approved a New York Stock Exchange (“NYSE”) rule change to prohibit brokers from voting a customer’s proxy in director elections for issuers other than registered investment companies without instructions from the customer.The formal release proposing proxy rule amendments requiring shareholder approval of executive compensation for recipients of TARP assistance is available at http://www.sec.gov/rules/proposed/2009/34-60218.pdf. The SEC has not issued a formal release for the other proposed proxy rule amendments. The SEC will issue an approval order for the NYSE rule change, which also codifies two previously published interpretations that do not permit broker discretionary voting for material amendments to investment advisory contracts with an investment company (see the March 10, 2009 Alert for a discussion of these amendments as proposed). The NYSE rule changes will apply to shareholder meetings held on or after January 1, 2010.
Alert July 07, 2009