The NYSE allows brokers to vote “in their discretion” on “routine” proxy votes. But fewer and fewer topics are considered “routine” these days, even the approval of auditors. The latest firm to end the practice of discretionary votes is TD Ameritrade. Some have raised concerns that this may limit the ability of corporations to get a quorum or to get approval for some proxy issues. We have no concerns about either one. This decision will ensure that corporate executives reach out to their shareholders to make their best case for these “routine” items and that institutional shareholders will look at each issue individually and on its own merits.

TD Ameritrade’s elimination of the practice of issuing discretionary voting at meetings of shareholders may have a major impact on the number of shares represented at shareholder meetings in the 2021 proxy season and beyond….The shares custodied at TD often represent the largest brokerage position for many issuers, therefore, the loss of the discretionary vote from TD is significant. The change at TD follows the elimination of discretionary voting by Charles Schwab and other brokers and continues a disturbing trend for issuers that rely on the discretionary vote.…Over the years, many issuers have depended on the broker discretionary vote to pass these proposals. However, as with achieving enough votes for a quorum, the ability to pass these proposals may now be in doubt.

Report from Alliance Advisors