56152 Federal Register / Vol. 75, No. 178 / Wednesday, September 15, 2010 / Notices 

18The text of the proposed rule change is 

available on Exchange’s Web site at http:// 

nasdaqtrader.com/micro.aspx?id=PHLXfilings, on 

the Commission’s Web site at http://www.sec.gov, at 

Phlx, and at the Commission’s Public Reference 

Room. 

19 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b-4. 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–Phlx–2010–122. 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,18 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, 100 F Street, NE., 

Washington, DC 20549, on official 

business days between the hours of 

10 a.m. and 3 p.m. Copies of the filing 

also will be available for inspection and 

copying at the principal office 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–Phlx– 

2010–122 and should be submitted on 

or before October 6, 2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.19

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. 2010–22945 Filed 9–14–10; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–62874; File No. SR–NYSE– 

2010–59] 

Self-Regulatory Organizations; New 

York Stock Exchange LLC; Notice of 

Filing and Order Granting Accelerated 

Approval of a Proposed Rule Change 

To Amend NYSE Rule 452 and Listed 

Company Manual Section 402.08 To 

Eliminate Broker Discretionary Voting 

on Executive Compensation Matters 

September 9, 2010. 

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

Securities Exchange Act of 1934 

(‘‘Exchange Act’’ or ‘‘Act’’) 1 and Rule 

19b-4 thereunder,2 notice is hereby 

given that on August 26, 2010, New 

York Stock Exchange LLC (‘‘NYSE’’ or 

the ‘‘Exchange’’) filed with the Securities 

and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been prepared 

by NYSE. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons and is 

approving the proposed rule change on 

an accelerated basis. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange is proposing to amend 

NYSE Rule 452, and corresponding 

NYSE Listed Company Manual Section 

402.08, to prohibit member 

organizations from voting uninstructed 

shares if the matter voted on relates to 

executive compensation, in accordance 

with the provisions of Section 957 of the 

Dodd-Frank Wall Street Reform and 

Consumer Protection Act (the ‘‘DoddFrank Act’’), which was signed by the 

President on July 21, 2010. 

The text of the proposed rule change 

is available at http://www.nyse.com, at 

the Exchange’s principal office, at the 

Commission’s Public Reference Room, 

and on the Commission’s Web site at 

http://www.sec.gov. 

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 

self-regulatory organization included 

statements concerning the purpose of 

and basis for the proposed rule changes. 

The text of these statements may be 

examined at the places specified in Item 

III below and is set forth in Sections A, 

B and C below. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange is proposing to amend 

NYSE Rule 452, titled Giving Proxies by 

Member Organizations, and 

corresponding NYSE Listed Company 

Manual Section 402.08, to prohibit 

member organizations from voting 

uninstructed shares if the matter voted 

on relates to executive compensation, in 

accordance with the provisions of 

Section 957 of the Dodd-Frank Act, 

which was signed by the President on 

July 21, 2010. Because Section 957 of 

the Dodd-Frank Act does not provide for 

a transition phase, the Exchange is 

proposing to adopt the proposed rule 

changes pursuant to Section 19(b) of the 

Act to comply with Section 957 of the 

Dodd-Frank Act and is requesting that 

the Commission approve the proposal 

on an accelerated basis. We are also 

proposing to add the words ‘‘or 

authorize’’ in certain places throughout 

the rule to clarify that the rule includes 

not only the giving of a proxy but also 

the authorization of such proxy. 

Current Requirements of NYSE Rule 452 

Under current NYSE and Commission 

proxy rules, brokers must deliver proxy 

materials to beneficial owners and 

request voting instructions in return. If 

voting instructions have not been 

received by the tenth day preceding the 

meeting date, Rule 452 provides that a 

broker may vote on certain matters 

when the broker has no knowledge of 

any contest as to the action to be taken 

at the meeting and provided such action 

is adequately disclosed to stockholders, 

and does not include authorization for 

a merger, consolidation or any matter 

which may affect substantially the rights 

or privileges of such stock. In addition, 

the Rule currently identifies 20 matters 

with respect to which brokers may not 

vote without instructions from 

beneficial owners. 

Enactment of the Dodd-Frank Wall 

Street Reform and Consumer Protection 

Act 

Prior to the July 21, 2010 enactment 

of the Dodd-Frank Act, under Rule 452 

and the Exchange’s prior 

interpretations, member organizations 

were permitted to cast votes on some 

matters, including some executive 

compensation proposals, without 

specific instructions from beneficial 

owners of the stock. However, the DoddVerDate Mar<15>2010 18:57 Sep 14, 2010 Jkt 220001 PO 00000 Frm 00102 Fmt 4703 Sfmt 4703 E:\FR\FM\15SEN1.SGM 15SEN1

srobinson on DSKHWCL6B1PROD with NOTICES
Federal Register / Vol. 75, No. 178 / Wednesday, September 15, 2010 / Notices 56153 

3 15 U.S.C. 78f(b). The Commission notes that 

Section 957 amends Section 6(b) of the Act by 

adding Section 6(b)(10). 

4 15 U.S.C. 78l. 5 15 U.S.C. 78f(b)(5). 

Frank Act contains a provision 

explicitly requiring the elimination of 

broker discretionary voting on matters 

related to executive compensation. 

Section 957 of the Dodd-Frank Act 

amends Section 6(b) 3 of the Exchange 

Act to require the rules of each national 

securities exchange to prohibit any 

member organization that is not the 

beneficial owner of a security registered 

under Section 12 4 of the Exchange Act 

from granting a proxy to vote the 

security in connection with certain 

stockholder votes, unless the beneficial 

owner of the security has instructed the 

member organization to vote the proxy 

in accordance with the voting 

instructions of the beneficial owner. The 

stockholder votes covered by Section 

957 include any vote (i) with respect to 

the election of a member of the board of 

directors of an issuer (other than an 

uncontested election of a director of an 

investment company registered under 

the Investment Company Act of 1940 

(the ‘‘Investment Company Act’’)), (ii) 

executive compensation or (iii) any 

other significant matter, as determined 

by the Commission, by rule. 

The Exchange prohibits member 

organizations from voting uninstructed 

shares if the matter voted on is the 

election of directors (other than in the 

case of an issuer registered under the 

Investment Company Act, provided the 

matter is not the subject of a countersolicitation). In addition, the 

Commission has not at this time 

identified other significant matters with 

respect to which the Exchange must 

prohibit member organizations from 

voting uninstructed shares. 

Accordingly, in order to carry out the 

requirements of Section 957 of the 

Dodd-Frank Act, the Exchange proposes 

to amend NYSE Rule 452, and 

corresponding NYSE Listed Company 

Manual Section 402.08, to prohibit 

member organizations from voting 

uninstructed shares if the matter voted 

on relates to executive compensation. 

Specifically, the Exchange is 

proposing to add a new Item 21 and 

accompanying commentary to NYSE 

Rule 452.11 (When member 

organization may not vote without 

customer instructions), and 

corresponding NYSE Listed Company 

Manual Section 402.08(B) (When 

Member Organization May Not Vote 

Without Customer Instructions), to 

provide that a member organization may 

not give or authorize a proxy to vote 

without instructions from the beneficial 

owner when the matter to be voted upon 

relates to executive compensation. 

The proposed commentary to Item 21 

would clarify that a matter relating to 

executive compensation would include, 

among other things, the items referred to 

in Section 14A of the Exchange Act 

(added by Section 951 of the DoddFrank Act), including (i) an advisory 

vote to approve the compensation of 

executives, (ii) a vote on whether to 

hold such an advisory vote every one, 

two or three years, and (iii) an advisory 

vote to approve any type of 

compensation (whether present, 

deferred, or contingent) that is based on 

or otherwise relates to an acquisition, 

merger, consolidation, sale, or other 

disposition of all or substantially all of 

the assets of an issuer and the aggregate 

total of all such compensation that may 

(and the conditions upon which it may) 

be paid or become payable to or on 

behalf of an executive officer. In 

addition, a member organization may 

not give or authorize a proxy to vote 

without instructions on a matter relating 

to executive compensation, even if such 

matter would otherwise qualify for an 

exception from the requirements of Item 

12, Item 13 or any other Item under 

NYSE Rule 452.11 and corresponding 

Listed Company Manual Section 402.08. 

Any vote on these or similar executive 

compensation-related matters would be 

subject to the requirements of NYSE 

Rule 452, as amended, and 

corresponding NYSE Listed Company 

Manual Section 402.08, as amended. 

Effective Date 

Because Section 957 of the DoddFrank Act does not provide for a 

transition phase, the Exchange is 

proposing to adopt the proposed rule 

changes pursuant to Section 19(b) of the 

Act to comply with Section 957 of the 

Dodd-Frank Act and is requesting that 

the Commission approve the proposal 

on an accelerated basis. 

2. Statutory Basis 

The basis under the Exchange Act for 

these proposed rule changes is the 

requirement under Section 6(b)(5) 5 that 

an exchange have rules that are 

designed to prevent fraudulent and 

manipulative acts and practices, to 

promote just and equitable principles of 

trade, to remove impediments to, and 

perfect the mechanism of a free and 

open market and, in general, to protect 

investors and the public interest. We are 

adopting these proposed rule changes to 

comply with the requirements of 

Section 957 of the Dodd-Frank Act, and 

therefore believe the proposed rule 

changes to be consistent with the Act, 

particularly with respect to the 

protection of investors and the public 

interest. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule changes will impose 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Exchange Act, as 

amended by the Dodd-Frank Act. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants or Others 

The Exchange has neither solicited 

nor received written comments on the 

proposed rule changes. 

III. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change 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–NYSE–2010–59 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 

Station Place, 100 F Street, NE., 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–NYSE–2010–59. 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 


srobinson on DSKHWCL6B1PROD with NOTICES
56154 Federal Register / Vol. 75, No. 178 / Wednesday, September 15, 2010 / Notices 

6 In approving this rule change, the Commission 

notes that it has considered the proposed rule’s 

impact on efficiency, competition, and capital 

formation. See 15 U.S.C. 78c(f). 

7 15 U.S.C. 78f(b)(10). 

8 15 U.S.C. 78f(b)(5). 

9See S. Rep. No. 111–176, at 136 (2010). 

10As noted above, Section 6(b)(10) also prohibits 

broker voting for director elections, except for 

uncontested director elections of registered 

investment companies, and also ‘‘any other 

significant matter, as determined by the 

Commission, by rule.’’ NYSE already prohibits 

broker voting in director elections except for 

uncontested director elections for registered 

investment companies. See NYSE Rule 452.11(19) 

and Listed Company Manual Section 402.08(B)(19) 

and note 11, infra. As to other matters, the 

Commission has not, to date, adopted rules 

concerning other significant matters where 

uninstructed broker votes should be prohibited, 

although it may do so in the future. Should the 

Commission adopt such rules, we would expect the 

NYSE to adopt coordinating rules promptly to 

comply with the statute. 

11As the Commission stated in approving NYSE 

rules prohibiting broker voting in the election of 

directors, having those with an economic interest in 

the company vote the shares, rather than the broker 

who has no such economic interest, furthers the 

goal of enfranchising shareholders. See Securities 

Exchange Act Release No. 60215 (July 1, 2009), 74 

FR 33293 (July 10, 2009) (SR–NYSE–2006–92). 

12 15 U.S.C. 78s(b)(2). 

13 15 U.S.C. 78s(b)(2). 

14 17 CFR 200.30–3(a)(12). 

Reference Room, 100 F Street, NE., 

Washington, DC 20549, 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 office of NYSE. 

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 publicly available. All 

submissions should refer to File 

Number SR–NYSE–2010–59 and should 

be submitted on or before October 6, 

2010. 

IV. Commission’s Findings and Order 

Granting Accelerated Approval of the 

Proposed Rule Change 

In its filing, the Exchange requested 

that the Commission approve the 

proposal on an accelerated basis. The 

Exchange stated that it believed good 

cause existed to grant accelerated 

approval because Section 957 of the 

Dodd-Frank Act does not provide for a 

transition period. 

After careful consideration, the 

Commission finds that the proposed 

rule change is consistent with the 

requirements of the Act and the rules 

and regulations thereunder applicable to 

a national securities exchange.6 The 

Commission believes that the proposal 

is consistent with Section 6(b)(10) 7 of 

the Act, which requires that national 

securities exchanges adopt rules 

prohibiting members that are not 

beneficial holders of a security from 

voting uninstructed proxies with respect 

to the election of a member of the board 

of directors of an issuer (except for 

uncontested elections of directors for 

companies registered under the 

Investment Company Act), executive 

compensation, or any other significant 

matter, as determined by the 

Commission, by rule. The Commission 

also believes that the proposal is 

consistent with Section 6(b)(5) 8 of the 

Act, which provides, among other 

things, that the rules of the Exchange 

must be designed to promote just and 

equitable principles of trade, 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, and are not designed to 

permit unfair discrimination between 

customers, issuers, brokers, or dealers. 

The Commission believes that the 

proposal is consistent with Section 

6(b)(10) of the Act because it adopts 

revisions that comply with that section. 

As noted in the accompanying Senate 

Report, Section 957, which adopts 

Section 6(b)(10), reflects the principle 

that ‘‘final vote tallies should reflect the 

wishes of the beneficial owners of the 

stock and not be affected by the wishes 

of the broker that holds the shares.’’ 9

The proposed rule change will make 

NYSE rules compliant with the new 

requirements of Section 6(b)(10) by 

prohibiting broker-dealers, who are not 

beneficial owners of a security, from 

voting uninstructed shares with respect 

to any matter on executive 

compensation.10

The Commission believes that the 

proposal is consistent with Section 

6(b)(5) of the Act because the proposal 

will further investor protection and the 

public interest by assuring that 

shareholder votes on executive 

compensation matters are made by those 

with an economic interest in the 

company, rather than by a broker that 

has no such economic interest, which 

should enhance corporate governance 

and accountability to shareholders.11

The Commission notes that the 

NYSE’s new rule prohibiting 

uninstructed broker votes on executive 

compensation covers the specific items 

identified in Section 951 of the DoddFrank Act, as well as any other matter 

concerning executive compensation, 

and has been drafted broadly to reflect 

the requirements of Section 6(b)(10) of 

the Act. The proposed rule language 

also specifically states that a broker vote 

on any executive compensation matter 

would not be permitted even if it would 

otherwise qualify for an exception from 

any item under Rule 452.11 or 

corresponding Listed Company Manual 

Section 402.08. The Commission 

believes this provision will make clear 

that any past practice or interpretation 

that may have permitted a broker vote 

on an executive compensation matter, 

under existing rules, will no longer be 

applicable and is superseded by the 

newly adopted provisions. 

Finally, the Commission notes that 

the change to reflect that the NYSE rules 

prohibit not only the giving of a proxy, 

but also the authorization of the proxy, 

should help to clarify the intent of the 

NYSE proxy rules and is consistent with 

the requirements of Section 6 of the Act. 

Based on the above, the Commission 

believes that the NYSE’s proposal will 

further the purposes of Sections 6(b)(5) 

and 6(b)(10) of the Act by ensuring that 

brokers, holding shares on behalf of 

beneficial owners, are not voting 

uninstructed shares on matters relating 

to executive compensation, which 

should enhance corporate 

accountability to shareholders. The rule 

filing should also serve to fulfill the 

Congressional intent in adopting 

Section 6(b)(10) of the Act. 

The Commission also finds good 

cause, pursuant to Section 19(b)(2) of 

the Act,12 for approving the proposed 

rule change prior to the 30th day after 

the date of publication of notice in the 

Federal Register. As noted above, 

Section 6(b)(10) of the Act, enacted 

under Section 957 of the Dodd-Frank 

Act, does not provide for a transition 

phase, and requires rules of national 

securities exchanges to prohibit, among 

other things, broker voting on executive 

compensation. The Commission 

believes that good cause exists to grant 

accelerated approval to the Exchange’s 

proposal, because it will conform NYSE 

Rule 452 and Section 402.08 of the 

Listed Company Manual to the 

requirements of Section 6(b)(10) of the 

Act. 

V. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,13 that the 

proposed rule change (SR–NYSE–2010– 

59) be, and it hereby is, approved on an 

accelerated basis. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.14

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. 2010–22934 Filed 9–14–10; 8:45 am] 

BILLING CODE 8010–01–P 


srobinson on DSKHWCL6B1PROD with NOTICES