Institutional Investment Managers Filing Form 13F Must Now Track and Report Executive Compensation Proxy Votes and Securities Lending Activities

On July 1, 2023, the first reporting period for disclosure on Form N-PX of proxy votes regarding certain executive compensation matters began for institutional investment managers that file Form 13F under the Securities Exchange Act of 1934, as amended (“Institutional Managers”).  Pursuant to new SEC rules adopted in late 2022, Institutional Managers will now be required to disclose annually on SEC Form N-PX their proxy voting records pertaining to say-on-pay matters (“Say-on-Pay”).  Say-on-Pay matters include: (1) periodic votes on the approval of executive compensation; (2) votes on the frequency of such executive compensation votes; and (3) votes to approve “golden parachute” compensation arrangements in connection with a merger, acquisition, consolidation, or the proposed sale or disposition of substantially all of an issuer’s assets. Importantly, Institutional Managers will be required to report abstentions from Say-on-Pay votes unless an Institutional Manager has a policy of not voting any proxies and, in fact, did not vote on any proxy voting matter during the applicable reporting period. Institutional Managers also will have to report on Form N-PX the number of shares of an issuer loaned but not recalled prior to a voting record date.  These proxy reporting requirements only apply to Say-on-Pay proxy votes of issuers who have a class of equity securities registered with the SEC under Section 12 of the Securities Exchange Act of 1934.

While the first Form N-PX will be due for submission in more than a year from now on August 31, 2024, the reporting period for that filing spans from July 1, 2023 to June 30, 2024. Thus, it is important for Institutional Managers to track their Say-on-Pay votes and loaned securities from July 1, 2023 and onwards to facilitate accurate reporting of the required information on Form N-PX.  In addition, Institutional Managers should review their current policies and procedures with respect to proxy voting and securities lending and recall practices to ensure such policies and procedures are consistent with the manner in which they will vote Say-on-Pay matters.