Tag: votes cast standard

NYSE proposes to amend calculation of “votes cast” [updated]

Currently, where a matter requires shareholder approval under NYSE rules, the minimum vote required is a majority of the votes cast on the matter. But how do you count votes cast?  Do you count abstentions?  What about broker non-votes? The NYSE has historically advised that broker non-votes do not count as votes cast, but abstentions do.  That means that, under the NYSE rules, approval requires that the votes in favor exceed the aggregate of the votes cast against the proposal plus abstentions. Unfortunately, that’s not how “votes cast” is typically defined for Delaware corporations.  If Delaware corporations elect in their charter or bylaws to use a “votes cast” standard, abstentions are generally not counted as “votes cast”—because an abstention reflects a decision not to vote on the matter and the holder has not cast those votes—with the result that, for a proposal to be approved, the votes in favor of the proposal must exceed the votes cast against. Confused? You’re not alone. The NYSE has “observed that this approach has caused confusion among listed companies.” That’s why the NYSE has just filed with the SEC a proposal to amend that provision of the NYSE Listed Company Manual. [Update: This proposal has been approved.]