Document ID: SEC-2010-0413-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange LLC
Posted Date: 2010-03-18T04:00Z

[Federal Register: March 18, 2010 (Volume 75, Number 52)]
[Notices]               
[Page 13170-13172]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr18mr10-109]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61694; File No. SR-NYSE-2010-18]

 
Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by New York Stock Exchange LLC To Amend the Bylaws of NYSE 
Euronext To Adopt a Majority Voting Standard in Uncontested Elections 
of Directors

March 11, 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 March 5, 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, 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is submitting this rule filing in connection with the 
proposal of its ultimate parent, NYSE Euronext (the 
``Corporation''),\3\ to amend its bylaws (``Bylaws'') to replace the 
plurality vote standard for election of directors in uncontested 
elections that is currently in the Bylaws with a majority vote standard 
for such elections. The existing plurality vote standard will be 
retained in connection with contested elections for directors. The text 
of the proposed rule change is available at the Exchange, at the 
Commission's Public Reference Room, and on the Exchange's Web site at 
http://www.nyse.com.
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    \3\ NYSE, a New York limited liability company, is an indirect 
wholly-owned subsidiary of NYSE Euronext.
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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 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 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
    The Exchange is submitting this rule filing in connection with the 
Corporation's proposal to amend its Bylaws to replace the plurality 
vote standard for election of directors in uncontested elections that 
is currently in the Bylaws with a majority vote standard for such 
elections. Specifically, the Bylaws currently provide that ``directors 
shall be elected by a plurality of the votes of the shares present in 
person or represented by proxy at the meeting and entitled to vote on 
the election of directors.'' Under the Corporation's corporate 
governance

[[Page 13171]]

guidelines previously adopted by the Board, however, any director 
nominee in an uncontested election (being an election in which the 
number of nominees equals the number of directors to be elected) who 
receives a greater number of ``withheld'' votes than ``for'' votes 
(including any ``against'' votes if that option were to be made 
available on the proxy card) must immediately tender his or her 
resignation from the Board. The Board will then decide, through a 
process managed by the Nominating and Governance Committee and 
excluding the nominee in question, whether to accept the resignation. 
In a contested election (being an election in which the number of 
nominees exceeds the number of directors to be elected), the 
unqualified plurality vote standard controls.
Uncontested Election
    The Corporation is proposing to add an explicit majority voting 
provision for uncontested director elections to the Bylaws, thereby 
replacing the plurality vote standard for election of directors in such 
elections that is currently in the Bylaws. The existing plurality vote 
standard will be retained in connection with contested elections for 
directors. Under the proposed amendment to the Bylaws, the proxy card 
would change for an uncontested election, and the stockholders would be 
given the choice to vote ``for,'' ``against'' or ``abstain'' with 
respect to each director nominee individually.\4\ In such an election, 
each director would be elected by the vote of the majority of the votes 
cast with respect to such director's election, meaning that the number 
of votes cast ``for'' such director's election exceeded the number of 
votes cast ``against'' that director's election (with ``abstentions'' 
not counted as a vote cast either ``for'' or ``against'' such 
director's election). In the event that any incumbent director fails to 
receive a majority of the votes cast, such director would be required 
to tender his or her resignation to the Nominating and Governance 
Committee of the Board (or another committee designated by the Board), 
and such committee would make a recommendation to the Board as to 
whether to accept or reject such resignation or whether other action 
should be taken. The Board would then act on the recommendation of such 
committee and publicly disclose its decision regarding the tendered 
resignation and the rationale behind the decision.
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    \4\ Stockholders are currently given three choices when voting 
for a slate of director nominees: They can vote (1) ``for'' all 
nominees, (2) ``withheld'' for all nominees or (3) ``withheld'' for 
certain nominees and ``for'' the remaining nominees.
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    The proposed amendment to the Bylaws also provides that a director 
who tenders his or her resignation as described above will not 
participate in the recommendation by the Nominating and Governance 
Committee or the Board of Directors action regarding whether to accept 
the tendered resignation. In the event that each member of the 
Nominating and Governance Committee fails to receive a majority of the 
votes cast in the same uncontested election, then the independent 
directors who received a majority of the votes cast in such election 
must appoint a committee among themselves to consider the tendered 
resignation and recommend to the Board whether to accept it. However, 
if the only directors who received a majority of the votes cast in such 
election constitute three or fewer directors, all directors may 
participate in the action regarding whether to accept the tendered 
resignation.
    Pursuant to the proposed amendment to the Bylaws, if the Board 
accepts a director's resignation as part of the process described above 
for uncontested elections, or if a nominee for director is not elected 
and the nominee is not an incumbent director, the Board may (i) fill 
the remaining vacancy as provided in Section 3.6 of the Bylaws and 
Article VI, Section 6 of the Certificate of Incorporation (involving a 
majority vote of the remaining directors then in office, though less 
than a quorum, or by the sole remaining director) or (ii) decrease the 
size of the Board as provided in Section 3.1 of the Bylaws and Article 
VI, Section 3 of the Certificate of Incorporation (involving adoption 
of a resolution by two-thirds of the directors then in office).
General Election Requirements
    The following applies to elections of directors and is not being 
amended. Section 2.7 of the Bylaws provides that, unless otherwise 
provided in the Certificate of Incorporation of the Corporation, each 
stockholder entitled to vote at any meeting of stockholders shall be 
entitled to one vote for each share of stock held by such stockholder 
that has voting power upon the matter in question. This entitlement, 
however, is subject to the voting limitation in the Certificate of 
Incorporation that generally prohibits a beneficial owner, either alone 
or together with related parties, from voting or causing the voting of 
shares of stock of the corporation, in person or by proxy or through 
any voting agreement or other arrangement, to the extent that such 
shares represent in the aggregate more than 10% of the then outstanding 
votes entitled to be cast on such matter. Any votes purported to be 
cast in excess of this limitation will be disregarded.\5\
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    \5\ See NYSE Euronext Amended and Restated Certificate of 
Incorporation at Article V, Section 1(A).
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    Relative to the foregoing, if any beneficial owner of the 
Corporation's stock, either alone or together with related parties, is 
party to any agreement, plan or other arrangement with any other person 
or entity relating to shares of stock of the Corporation entitled to 
vote on any matter under circumstances in which (i) the result would be 
that shares of stock of the Corporation that would be subject to such 
agreement, plan or other arrangement would not be voted on any matter, 
or any proxy relating thereto would be withheld and (ii) the effect of 
the agreement, plan or arrangement would be to enable a beneficial 
owner (but for these provisions), either alone or together with related 
parties, to vote, possess the right to vote or cause the voting of 
shares of the Corporation's stock to exceed 10% of the then outstanding 
votes entitled to be cast (assuming that all shares of stock of the 
Corporation that are subject to the agreement, plan or other 
arrangement are not outstanding votes entitled to be cast on such 
matter), then this recalculated 10% voting limitation will be 
applicable. Any votes purported to be cast in excess of this 
recalculated voting limitation will be disregarded.\6\
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    \6\ See id.
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    At each meeting of stockholders of the Corporation, except as 
otherwise provided by law or the Certificate of Incorporation of the 
Corporation, the holders of a majority of the voting power of the 
outstanding shares of stock of the Corporation entitled to vote on a 
matter at the meeting, present in person or represented by proxy, will 
constitute a quorum (it being understood that any shares in excess of 
the applicable voting limitation discussed above will not be counted as 
present at the meeting and will not be counted as outstanding shares of 
stock of the Corporation for purposes of determining whether there is a 
quorum, unless and only to the extent that such voting limitation shall 
have been duly waived as provided in the Certificate of 
Incorporation).\7\
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    \7\ See NYSE Euronext Amended and Restated Certificate of 
Incorporation at Article VIII, Section 2.
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2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) \8\ of the 
Act,

[[Page 13172]]

in general, and furthers the objectives of Section 6(b)(1) \9\ of the 
Act, which requires a national securities exchange to be so organized 
and have the capacity to carry out the purposes of the Act and to 
comply, and to enforce compliance by its members and persons associated 
with its members, with the provisions of the Act. The proposed rule 
change is also consistent with, and furthers the objectives of, Section 
6(b)(5) \10\ of the Act, in that it 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 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. Specifically, the Exchange believes that the proposed 
rule change will protect investors and the public interest by codifying 
in the Bylaws the existing policy of the Corporation aimed at ensuring 
better corporate governance and accountability to stockholders by means 
of a voting procedure leading to election results that more accurately 
reflect the views of stockholders on the qualifications and suitability 
of individual director nominees, even if there are no alternative 
director nominees to vote for on the ballot.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(1).
    \10\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

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 NYSE 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 rule-comments@sec.gov. Please include 
File Number SR-NYSE-2010-18 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-NYSE-2010-18. 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-
NYSE-2010-18, and should be submitted on or before April 8, 2010.
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    \11\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-5916 Filed 3-17-10; 8:45 am]
BILLING CODE 8011-01-P