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Committee adopts substitute for SB 183 to limit proxy‑advisor influence on state retirement systems
Summary
The committee adopted a substitute and advanced Senate Bill 183, which requires proxy advisers to document economic analysis and act in the financial interest of retirement plan members when recommending shareholder votes; the measure passed committee with eight yeas, one no and one pass.
The committee adopted a committee substitute to Senate Bill 183 and advanced the measure after testimony from insurance-industry representatives arguing for tighter standards on proxy advisers used by retirement systems.
Chris Nolan, testifying for the American Property Casualty Insurance Association, said the substitute defines terms including “shareholder sponsored proposal,” “economic analysis” and “proxy advisory firm.” Nolan said the substitute would require a proxy adviser acting on behalf of a retirement system to act “solely in the interest of the retirement system’s members and beneficiaries” and to provide documented economic analysis supporting a recommendation to vote for or against a company board’s advice.
Nolan warned that proxy advisers have sometimes recommended votes in favor of shareholder proposals promoting environmental, social and governance goals contrary to company board recommendations and that those recommendations can influence large blocks of votes. He cited industry research (as described in his remarks) and argued the substitute would strengthen fiduciary focus on financial interest. Several senators praised the intent to focus voting recommendations on financial returns and fiduciary duty; one senator recorded a no vote and one senator recorded a pass. The committee approved the measure 8–1 with one pass.
