The Securities and Exchange Commission has made a dramatic change in the proxy voting process, having adopted a proposal that states that broker-dealers can only vote client shares when given express instruction to do so. According to Reuters, the new rule came amid a flurry of new proposals designed to modify the greater voting process.
The broker voting proposal—passed 3-2—stipulates that broker-dealers are no longer allowed to cast their votes without instructions from their clients; previously, broker-dealers voted their client shares whether they had received instruction or not, usually to the benefit of the vote-sponsoring firm.
“Counting uninstructed broker votes is akin to stuffing the ballot box for management as broker votes almost always are cast in favor of management’s candidates for board seats,” said Council of Institutional Investors Executive Director Ann Yerger.
Yesterday also saw proposals put forth that would require company boards to disclose more information in regards to pay policies and board member backgrounds, as well as justification for a given leadership structure.
The new broker-dealer voting rule will go into effect in 2010.