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Committee sends pension proxy-adviser restrictions to the House floor
Summary
Senate Bill 183, introduced by Senator Matt Nunn, would constrain proxy advisers working for state retirement systems to act solely in the financial interests of current and future retirees; the House committee reported the measure favorably after sponsor remarks and limited questions.
State Senator Matt Nunn presented Senate Bill 183 to the House Standing Committee on Banking and Insurance, saying the bill would require proxy advisers acting on behalf of Kentucky state retirement systems to prioritize the financial interests of current and future retirees and avoid recommendations driven by social or political agendas.
Nunn told the committee that many shareholder proposals pursued by outside sponsors address social or political objectives and that proxy advisers sometimes recommend votes on those proposals contrary to a company’s board of directors. He said the bill aims to keep “politics and social agendas away from those accounts that future and current state retirees depend on.” He cited a U.S. House memo claiming that 61% of shareholder proposals in 2023 were related to social or political goals and referenced research suggesting correlation between activism by public pension funds and reduced stock valuations for some companies.
Chris Nolan of the American Property Casualty Insurance Association and several committee members spoke in support during questions. Several representatives praised the measure as a way to remove political considerations from pension investing. Representative Pollock and floor leader Rudy offered complimentary remarks to the sponsor during the discussion. The committee took a roll call and the chair announced, “Senate Bill 183 does pass with favorable expression.” The transcript includes no numeric tally of the committee vote.
Why it matters: the bill would change oversight and limits for proxy advisers hired by state retirement systems, potentially constraining how those advisers evaluate and vote on shareholder proposals. The sponsor told the committee that the two largest proxy advisers, Institutional Shareholder Services (ISS) and Glass Lewis, control about 97% of the market and that at least one state fund uses ISS.
Next steps: the committee reported the bill favorably to the House floor for further consideration.
