The
SEC has proposed a new rule covering which types of firms have to disclose votes on executive compensation proposals and standardizing the disclosure methods.
Specific new mandates in the rule include:
- Hedge funds and endowments must now disclose how they vote on executive compensation proposals.
- Funds must use a predetermined format for voting disclosures on both management and shareholder proposals.
- Investment managers would also need to provide these disclosures on their websites and clearly label what the funds voted on by category, including climate, human rights and human capital, diversity, equity, and inclusion, political activity and governance-related issues.
The rule fits squarely into Chairman Gensler’s focus on increased disclosure and pushing investment managers (and companies) to live up to their public statements.
The rules are expected to provide enhanced clarity to companies as well. Specifically, for say-on-pay votes, the proposed disclosure enhancements should give companies a better idea of how and why investors voted on pay proposals. While firms such as BlackRock, Vanguard, and State Street already publish their votes for some companies after the meeting, for the most part, companies are left to sort through N-PX forms for each fund run by an investment management company to determine how the firm voted overall. If the rules require the vote disclosures much sooner after the annual meeting, companies may be better able to discern concerns.
In
other SEC news, John Coates will step down as Acting SEC General Counsel. Dan Berkovitz, a current Commissioner at the Commodity Futures Trading Commission, will be the new SEC General Counsel. Mr. Berkovitz also served as the CFTC General Counsel during Chairman Gensler’s leadership of that agency.
