
[Federal Register: April 27, 2010 (Volume 75, Number 80)]
[Notices]               
[Page 22169-22170]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr27ap10-102]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61947; File No. SR-NYSE-2010-18]

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

April 20, 2010.
    On March 5, 2010, the New York Stock Exchange LLC (``NYSE'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to amend the By-Laws of its parent corporation, 
NYSE Euronext (``Corporation''). The proposed rule change was published 
for comment in the Federal Register on March 18, 2010.\3\ The 
Commission received no comment letters on the proposed rule change. 
This order approves the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 61694 (March 11, 
2010), 75 FR 13170.
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    On behalf of the Corporation, NYSE proposed to make certain 
amendments to the Corporation's By-Laws to modify its direct election 
procedures. Under the existing By-Laws, directors are 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 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.
    NYSE proposed to amend the Corporation's By-Laws to add an explicit 
majority voting provision for uncontested director elections that would 
replace the plurality vote standard for such elections that is 
currently in the By-Laws. Contested elections would remain subject to 
the plurality standard.
    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. 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 either ``for'' or ``against'' such director's election). If 
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 recommend to the 
Board 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.\4\
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    \4\ The proposed amendment to the Bylaws also provides that a 
director who tenders his or her resignation would not participate in 
the recommendation by the Nominating and Governance Committee or the 
Board of Directors action regarding whether to accept the tendered 
resignation. If 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.
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    Pursuant to the proposed amendment to the By-Laws, 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 By-Laws 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).
    After careful review, 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.\5\ 
In particular, the Commission finds that the proposed rule change is 
consistent with Section 6(b)(1) of the Act,\6\ which requires an 
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 Act. The 
Commission also finds that the

[[Page 22170]]

proposed rule change is consistent with Section 6(b)(5) of the Act,\7\ 
which requires that the rules of the exchange be designed, among other 
things, 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 a national 
market system, and, in general, to protect investors and the public 
interest.
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    \5\ In approving this proposed 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).
    \6\ 15 U.S.C. 78(b)(1).
    \7\ 15 U.S.C. 78f(b)(5).
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    The Commission believes that the proposed rule change to amend the 
Corporation's By-Laws to adopt a majority vote standard for uncontested 
elections is consistent with the Act. The Commission believes that the 
proposed rule change is designed to allow the members of the 
Corporation's Board of Directors to be elected in a manner that closely 
reflects the desires of its shareholders, while also providing a 
process for addressing the circumstance when a director fails to 
receive a majority of votes in an uncontested election.\8\
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    \8\ The Commission notes that NYSE represented that the proposed 
change would not affect the voting limitations contained in the 
Corporation's certificate of incorporation.
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    It is therefore ordered, pursuant to Section 19(b)(2) of the Act, 
that the proposed rule change (SR-NYSE-2010-18) be, and it hereby is, 
approved.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-9679 Filed 4-26-10; 8:45 am]
BILLING CODE 8011-01-P

