In a new rule effective January 1, 2010, the SEC has eliminated discretionary voting on directors by brokers. In the past, this rule allowed brokers to vote proxies on behalf of beneficial shareholders for uncontested directors for publicly held companies, as long as the beneficial shareholder had received the proxy materials with plenty of time before the meeting and had not already submitted votes.
Under the new rule, brokers’ discretionary votes will not count toward the election for a director. Given the large number of shares held in street name, this will decrease the number of shares voted on directors, making it easier to unseat a director. This gives shareholders more responsibility in electing directors, so ensuring shareholders receive proxy materials with adequate time prior to the meeting, and duplicate materials if necessary to shareholders with significant holdings, will help guarantee adequate voting results.
If you have any directors that have had opposition in prior votings, you may want to consider contacting your Colonial account manager for consultation. To view specific details, please view the SEC release below.