[Federal Register Volume 75, Number 52 (Thursday, March 18, 2010)]
[Notices]
[Pages 13170-13172]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-5916]
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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 [email protected]. 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