The Securities and Exchange Commission will vote Wednesday to propose several new rules related to investment funds’ votes on proxy proposals, including whether they support companies’ compensation packages for their top executives.
The Dodd-Frank financial reform law, passed in the wake of the 2008 financial crisis, required public companies to hold non-binding shareholder proxy votes on the compensation of their most highly paid executives. It also required companies to disclose so-called “golden parachute” agreements, or compensation arrangements for executives in the event of a merger, acquisition or other transaction.
If the rule is adopted, it would fulfill a mandate in the Dodd-Frank law to require mutual funds, exchange-traded funds and other investment vehicles to disclose their votes on executive compensation. The SEC will vote on whether to propose the rule during a Wednesday meeting. If the proposal is adopted, it will begin a 60-day comment period after which the commission can vote to finalize the rule.
The commission will also vote to propose a rule requiring funds to disclose when they are not able to participate in a proxy vote because they have lent securities to another party, like investors who borrow shares for a short sale.
In addition, the SEC will consider proposing requirements that fund managers organize their voting reports in structured data language that makes them easier to analyze.