Advisors Face Enhanced Reporting of Say-on-Pay Votes
What You Need to Know
Institutional investment managers are required to report executive compensation votes on the new version of Form N-PX.
“Institutional investment manager” includes RIAs who manage client assets, and there’s no exception for small holdings.
Reporting on Form N-PX for say-on-pay votes starts Aug. 31, covering activity from July 1, 2023, to June 30, 2024.
Rule 14Ad-1 requires all institutional investment managers, including registered investment advisors who manage client assets, subject to the reporting requirements of Section 13(f) of the Exchange Act to report say-on-pay votes on the new version of Form N-PX when voting on certain types of executive compensation, including what is known as “golden parachute” compensation.
That term generally refers to arrangements with named executive officers concerning compensation (whether present, deferred or contingent) that is based on or relates to an acquisition, merger or similar transaction. Form N-PX requires managers to disclose the number of shares voted (or instructed to be voted) and how those shares were voted, as reflected in their records at the time of filing.
The rules do not contain a de minimis exception for smaller holdings. Even if the advisory firm is a 13(f) filer that does not vote proxies or does not vote on any say-on-pay matters, Form N-PX must still be filed. However, if an institutional investment manager is not subject to reporting on Section 13(f), the filing of Form N-PX is not required.
Section 13(f)(6)(A) of the Exchange Act defines “institutional investment manager” as “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.”
A 2020 FAQ from the Securities and Exchange Commission clarified that banks, including their trust departments, insurance companies, broker-dealers, trustees, and investment advisors who manage private accounts, mutual fund assets or pension plan assets are institutional investment managers.
