Federal Register / Vol. 75, No. 42 / Thursday, March 4, 2010 / Notices 9985 

21 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3Section 216 of the General Corporation Law of 

the State of Delaware provides that in the absence 

of the specification in the certificate of 

incorporation or bylaws of a Delaware corporation, 

directors of the Delaware corporation shall be 

elected by a plurality of the shares present in 

person or represented by proxy at the meeting and 

entitled to vote on the election of directors. Since 

the Certificate of Incorporation and By-Laws of 

NASDAQ OMX do not specify the voting standard 

for the election of NASDAQ OMX’s directors, the 

Section 216 default standard applies to NASDAQ 

OMX and, therefore, elections of NASDAQ OMX’s 

directors are currently governed by a plurality vote 

standard. 

4See NASDAQ OMX By-Law Article IV, Section 

4.5. 

should submit only information that 

you wish to make available publicly. 

All submissions should refer to File 

Number SR–NASDAQ–2010–024, and 

should be submitted on or before March 

25, 2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.21

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–4411 Filed 3–3–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–61582; File No. SR– 

NASDAQ–2010–025] 

Self-Regulatory Organizations; The 

NASDAQ Stock Market LLC; Notice of 

Filing of Proposed Rule Change To 

Amend the By-Laws of The NASDAQ 

OMX Group, Inc. 

February 25, 2010. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on February 

24, 2010, The NASDAQ Stock Market 

LLC (the ‘‘Exchange’’ or ‘‘NASDAQ’’) 

filed with the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change as described in 

Items I, II, and III below, which Items 

have been prepared by the Exchange. 

The Commission is publishing this 

notice to solicit comments on the 

proposed rule change from interested 

persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The NASDAQ Exchange is filing this 

proposed rule change relating to the ByLaws of its parent corporation, The 

NASDAQ OMX Group, Inc. (‘‘NASDAQ 

OMX’’). The text of the proposed rule 

change is available at http:// 

nasdaqomx.cchwallstreet.com, at the 

Exchange’s principal office, on the 

Commission’s Web site at http:// 

www.sec.gov, and at the Commission’s 

Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

NASDAQ Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

NASDAQ Exchange has prepared 

summaries, set forth in Sections A, B, 

and C below, of the most significant 

aspects of such statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

NASDAQ OMX is proposing to make 

certain amendments to its By-Laws to 

make improvements in its governance. 

Currently, NASDAQ OMX By-Laws 

provide that each director receiving a 

plurality of the votes at any election of 

directors at which a quorum is present 

is duly elected to the Board.3 Under 

Corporate Governance Guidelines 

adopted by the Board, however, any 

director in an uncontested election who 

receives a greater number of votes 

‘‘withheld’’ from his or her election than 

votes ‘‘for’’ such election is required to 

tender his or her resignation promptly 

following receipt of the certification of 

the stockholder vote. The NASDAQ 

OMX Nominating & Governance 

Committee then considers the 

resignation offer and recommends to the 

Board whether to accept it. Within 90 

days after the certification of the 

election results, the Board will decide 

whether to accept or reject the 

resignation. Promptly thereafter, the 

Board will announce its decision by 

means of a press release. In a contested 

election (i.e., where the number of 

nominees exceeds the number of 

directors to be elected), the unqualified 

plurality standard controls. 

Uncontested Election 

NASDAQ OMX proposes the adoption 

of a majority voting standard by 

amending Article IV, Section 4.4 of the 

By-Laws to provide that, in an 

uncontested election, directors shall be 

elected by holders of a majority of the 

votes cast at any meeting for the election 

of directors at which a quorum is 

present. Under the majority voting 

standard, a nominee who fails to receive 

the requisite vote would not be duly 

elected to the Board; however, because 

a director holds office until his or her 

successor is duly elected and qualified, 

any incumbent director-nominee who 

fails to receive the requisite vote does 

not automatically cease to be a director. 

Instead, such director continues as a 

‘‘holdover director’’ until such director’s 

death, resignation or removal, or until 

his or her successor is duly elected and 

qualified. For this reason, the majority 

voting standard under consideration 

requires that any incumbent nominee, 

as a condition to his or her nomination 

for election, must submit in writing an 

irrevocable resignation, the effectiveness 

of which is conditioned upon the 

director’s failure to receive the requisite 

vote in any uncontested election and the 

Board’s acceptance of the resignation. 

The resignation would be considered by 

the Nominating & Governance 

Committee and acted upon by the Board 

in the same manner as a resignation 

tendered under current rules.4

Acceptance of that resignation by the 

Board shall be in accordance with the 

policies and procedures adopted by the 

Board for such purpose. NASDAQ OMX 

specifies its policies and procedures 

pertaining to the election of its directors 

in its By-Laws. Specifically, the policies 

and procedures for the acceptance of the 

resignation of a director, by the Board, 

are proposed to be specified in By-Law 

Article IV, Section 4.4. There are no 

additional policies and procedures other 

than what is indicated in the By-Laws. 

In the event that NASDAQ OMX 

proposes to further amend its By-Laws 

with respect to the election of directors, 

including the adoption of any policies 

and procedure with respect to such 

election, NASDAQ OMX shall file a 

proposed rule change with the 

Commission to seek approval of those 

amendments. 

Contested Election 

The Exchange is codifying its process 

for a contested election. The directors 

shall continue to be elected by a 

plurality vote in a contested election. 

There is no change to the process for 

contested elections because if a majority 

voting standard were to apply in a 

contested election, the likelihood of a 

‘‘failed election’’ (i.e., a situation in 

which no director receives the requisite 

vote) would be more pronounced. 

Moreover, the rationale underpinning 

the majority voting policy does not 

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9986 Federal Register / Vol. 75, No. 42 / Thursday, March 4, 2010 / Notices 

5See NASDAQ OMX Certificate of Incorporation 

at Article IV, C.1(a). 

6See NASDAQ OMX Certificate of Incorporation 

at Article IV, C.1(b)2. 

7 15 U.S.C. 78f. 

8 15 U.S.C. 78f(b)(2), (5). 9 17 CFR 200.30–3(a)(12). 

apply in contested elections where 

stockholders are offered a choice among 

competing candidates. Directors are 

currently elected by a plurality of votes 

present in person or represented by 

proxy at a meeting. The directors who 

receive the greatest number of votes cast 

for election of directors at the meeting 

will be elected. 

General Election Requirements 

The following applies to elections of 

directors and is not being amended. 

Each share of common stock has one 

vote,5 subject to the voting limitation in 

NASDAQ OMX’s certificate of 

incorporation that generally prohibits a 

holder from voting in excess of 5% of 

the total voting power of NASDAQ 

OMX.6 In addition, each note holder is 

entitled to the number of votes equal to 

the number of shares of common stock 

into which such note could be 

converted on the record date, subject to 

the 5% voting limitation contained in 

the certificate of incorporation. 

The presence of owners of a majority 

(greater than 50%) of the votes entitled 

to be cast by holder of NASDAQ OMX 

voting securities constitutes a quorum. 

Presence may be in person or by proxy. 

Any securities not voted, by abstention, 

will not impact the vote. 

2. Statutory Basis 

The NASDAQ Exchange believes that 

the proposed rule change is consistent 

with the provisions of Section 6 of the 

Act,7 in general, and with Sections 

6(b)(1) and (b)(5) of the Act,8 in 

particular, in that the proposal enables 

the NASDAQ Exchange to be so 

organized as to have the capacity to be 

able to carry out the purposes of the Act 

and to comply with and enforce 

compliance by members and persons 

associated with members with 

provisions of the Act, the rules and 

regulations thereunder, and selfregulatory organization rules, and is 

designed to prevent fraudulent and 

manipulative acts and practices, to 

promote just and equitable principles of 

trade, to foster cooperation and 

coordination with persons engaged in 

regulating, clearing, settling, processing 

information with respect to, and 

facilitating transactions in securities, to 

remove impediments to and perfect the 

mechanism of a free and open market 

and a national market system, and, in 

general, to protect investors and the 

public interest. 

For purposes of an uncontested 

election, the proposed amendments 

adopt a majority vote standard, for the 

NASDAQ Exchange’s parent, which 

would enable its directors to be elected 

in a manner reflective of the desires of 

shareholders and provide a mechanism 

to protect against the election of 

directors by less than a majority vote of 

the shareholders. The plurality standard 

would continue to apply in contested 

elections. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The NASDAQ Exchange does not 

believe that the proposed rule change 

will result in any burden on 

competition that is not necessary or 

appropriate in furtherance of the 

purposes of the Act, as amended. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

Written comments were neither 

solicited nor received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Within 35 days of the date of 

publication of this notice in the Federal 

Register or within such longer period (i) 

as the Commission may designate up to 

90 days of such date if it finds such 

longer period to be appropriate and 

publishes its reasons for so finding or 

(ii) as to which the self-regulatory 

organization consents, the Commission 

will: 

A. By order approve such proposed 

rule change, or 

B. Institute proceedings to determine 

whether the proposed rule change 

should be disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change, as amended, is consistent with 

the Act. Comments may be submitted by 

any of the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an e-mail to rulecomments@sec.gov. Please include File 

Number SR–NASDAQ–2010–025 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–NASDAQ–2010–025. This 

file number should be included on the 

subject line if e-mail is used. 

To help the Commission process and 

review your comments more efficiently, 

please use only one method. The 

Commission will post all comments on 

the Commission’s Internet Web site 

(http://www.sec.gov/rules/sro.shtml). 

Copies of the submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for Web site viewing and 

printing in the Commission’s Public 

Reference Room on official business 

days between the hours of 10 a.m. and 

3 p.m. Copies of such filing also will be 

available for inspection and copying at 

the principal offices of the Exchange. 

All comments received will be posted 

without change; the Commission does 

not edit personal identifying 

information from submissions. You 

should submit only information that 

you wish to make available publicly. 

All submissions should refer to File 

Number SR–NASDAQ–2010–025, and 

should be submitted on or before March 

25, 2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.9

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–4453 Filed 3–3–10; 8:45 am] 

BILLING CODE 8011–01–P 

mstockstill on DSKH9S0YB1PROD with NOTICES