SEC enforces say on pay rules for proxy voting records
November 3, 2022
Wall Street’s top regulator, the Securities and Exchange Commission (SEC), has confirmed new rules relating to how investment funds report their proxy votes.
In a move aimed at greater transparency, the SEC has also updated the procedure for disclosing ‘say-on-pay’ votes for institutional investment managers.
The SEC, an independent agency of the United States federal government, adopted the changes this week after a split 3-2 vote, with Republican Commissioners Hester Peirce and Mark Uyeda against the changes.
The amendments relate to the use of Form N-PX, which has been in place for nearly two decades and is completed by mutual funds and other management investment firms to detail their proxy voting record.
The changes are intended to make voting records more usable and easier to analyse, improving investors’ ability to monitor how their funds vote and compare different funds’ voting records.
They will also require institutional investment managers to disclose how they voted on executive compensation – or so-called ‘say-on-pay’ matters.
The new rules will be effective for votes occurring on or after July 1, 2023, with the first filings subject to the amendments due in 2024.
SEC Chair Gary Gensler said: “I’m pleased to support these amendments because they will allow investors to better understand and analyse how their funds and managers are voting on shares held on their behalf.
“It will provide investors with more detailed information about proxy votes, create more consistency around how funds describe their proxy votes, and structure Form N-PX in a machine-readable format.
“This rulemaking also will require institutional investment managers to disclose how they voted on ‘say-on-pay’ matters, which fulfils the mandate under Section 951 of the Dodd-Frank Act of 2010.
“Together, these enhancements to Form N-PX will make it more useful and more usable for investors.”
Last Updated: 4 November 2022