On October 18, 2010, the SEC proposed rules implementing the Dodd-Frank Act requirement that institutional investment managers report how they voted on say-on-pay, say-on-frequency and say-on-golden-parachute votes. The proposed reporting rules provide that an institutional investment manager subject to reporting obligations under Section 13(f) of the Exchange Act must report annually on Form N-PX how it voted on these proposals. Covered institutional investment managers will be required to report votes relating to shareholder meetings that occur on or after January 21, 2011.

An institutional investment manager will be required to report its voting of any security over which the manager had or shared voting power with respect to say-on-pay, say-on-frequency and say-on-golden-parachute votes, without regard to whether it had voting power over other matters. The report would be required to be filed no later than August 31 of each year, with respect to votes that occurred in the 12 months ending June 30 of that year. The proposed rules provide a transition period, with respect to Form N-PX reporting obligations, for institutional investment managers that were previously not subject to Section 13(f) reporting obligations but became subject to such obligations in a given calendar year (e.g., by crossing the $100 million threshold).

The information required to be disclosed in Form N-PX will include the following:

  • name of the issuer of the security
  • exchange ticker symbol of the security and its CUSIP number
  • shareholder meeting date
  • brief identification of the matter voted on
  • with respect to registered management investment companies only, whether the matter was proposed by the issuer or a shareholder; number of shares the reporting person was entitled to vote (with respect to registered management investment companies) or had or shared voting power over (with respect to institutional investment managers)
  • number of shares actually voted
  • how the person voted those shares including, with respect to votes cast in multiple manners, the number of votes cast in each manner
  • whether the vote was for or against management’s recommendation
  • identification of each institutional investment manager on whose behalf the Form N-PX is being filed

Comments are due on the proposed rules by November 18,2010

http://www.sec.gov/rules/proposed/2010/34-63123.pdf