The New York Stock Exchange moved yesterday to bar Wall Street firms from casting votes on behalf of customers who do not provide voting instructions on corporate proxy matters.
The rule change, which was must be approved by the Securities and Exchange Commission, is not expected to go into effect until the 2008 proxy season.
Under the current system, the stock exchange allows brokers to vote the shares they hold for investors on certain “routine” proposals if the owner of the stock does not provide voting instructions at least 10 days before a scheduled meeting. The practice has extended to director elections.
Critics say that those elections are not actually routine and complain that the practice entrenches company boards, because brokers tend to vote those shares for directors backed by company management.
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