RIA Compliance Blog
In November 2022, the U.S. Securities and Exchange Commission (“SEC”) adopted new rule 14Ad-1, which requires that institutional investment managers that are subject to the reporting requirements of section 13(f) of the Exchange Act annually report each say-on-pay vote over which the manager had voting power on the Form N-PX. Institutional investment managers include any person, other than a natural person, investing in or buying and selling securities for its own account, and any person exercising investment discretion with respect to the account of any other person (“Institutional Managers”). Any Institutional Managers that are required to file Form 13F must disclose any say-on-pay votes over which it exercised voting power on Form N-PX. The types of say-on-pay votes that must be reported include votes on approval of executive compensation, on the frequency of that compensation, and on approval of “golden parachute” compensation connected to a merger or acquisition.
The SEC adopted a two-part test to determine whether an Institutional Manager “exercised voting power” over a security and thus must report a say-on-pay vote on Form N-PX. Accordingly, an Institutional Manager must report a say-on-pay vote for a security if the manager: (1) has the power to vote, or direct the voting of, a security; and (2) exercises this power to influence a voting decision for the security. Even if an Institutional Manager did not exercise voting power over any say-on-pay votes, it must still file a notice on the Form N-PX indicating that it does not have any proxy votes to report. Continue reading ›