US SEC Adopts ‘Say on Pay’ Disclosure Rules

New US Securities and Exchange Commission (SEC) rules will require institutional investment managers to disclose how they voted on executive compensation resolutions, also known as ‘Say on Pay’. The amendments mean that funds and managers now need to categorise each vote by type and, where possible, tie a description and order of voting matters to the issuer’s “form of proxy”, to help investors both identify votes of interest and compare voting records. Funds and managers will also need to disclose the number of shares that were voted or instructed to be voted one executive pay resolutions, as well as the percentage of shares loaned and not recalled (and therefore not voted). These new rules will apply to votes from 1 July, 2023, with the first amendment-compliant filings due in 2024. SEC Chair Gary Gensler said: “The amendments 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 rule-making 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 would make it more useful, and more usable, to investors.”

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