Pension Proxy Votes Go Public, Except On Contracts Already Signed

The text as introduced · 584 words

89R9326 JCG-D

By: Paul
H.B. No. 3776

A BILL TO BE ENTITLED

AN ACT

relating to reporting requirements for a public retirement system

that authorizes the system's shares to be voted by a proxy advisor

or investment manager.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Subchapter C, Chapter 802, Government Code, is

amended by adding Section 802.208 to read as follows:

Sec. 802.208. PROXY VOTING: ANNUAL REPORTING. (a) In this

section:

(1) "Investment manager" means a person who for

compensation provides professional investment management services.

The term:

(A) includes a person eligible for appointment as

an investment manager under Section 802.204; and

(B) does not include:

(i) an employee or member of an advisory

committee of a public retirement system; or

(ii) a seller of security interests.

(2) "Proxy advisor" means a person who for

compensation provides corporate governance ratings, proxy research

and analyses, proxy voting, or other similar services to the

shareholders of a publicly traded entity, or other interested

parties, for the purpose of advising a shareholder or other

interested party on how to vote on measures under consideration by

shareholders or voting on behalf of a shareholder by proxy.

(b) This section applies only to a public retirement system

that holds shares that the system is entitled to vote by proxy.

(c) Except as provided by Subsection (d), not later than the

180th day after the last day of a public retirement system's fiscal

year, the governing body of the system shall tabulate all proxy

votes made on behalf of the system by proxy advisors during the

preceding fiscal year of the system and report the votes to the

State Pension Review Board. For each vote, the report must contain a

vote caption, the system's vote, the recommendation, if any, of the

company holding the election, and, as applicable, the

recommendation of the proxy advisor. The State Pension Review Board

shall post reports submitted under this subsection to the board's

publicly accessible Internet website.

(d) Instead of submitting a report under Subsection (c), the

governing body of a public retirement system may provide to the

State Pension Review Board the location of a report posted to the

system's publicly accessible Internet website that contains the

information required by that subsection.

(e) Except as provided by Subsection (f), if the governing

body of a public retirement system grants proxy voting authority to

an investment manager, the investment manager shall submit a report

to the retirement system, and the retirement system shall submit a

report to the State Pension Review Board, that tabulates all proxy

votes cast by the investment manager on behalf of the system for

each 12-month period the investment manager is managing any assets

of the system. The State Pension Review Board shall post the reports

submitted under this subsection to the board's publicly accessible

Internet website.

(f) Subsection (e) does not apply to an investment manager

that manages less than $50 million of a public retirement system's

assets.

(g) The State Pension Review Board may adopt rules to

implement this section.

SECTION 2. The changes in law made by this Act apply only to

a contract entered into on or after the effective date of this Act.

A contract entered into before the effective date of this Act is

governed by the law in effect on the date the contract was entered

into, and the former law is continued in effect for that purpose.

SECTION 3. This Act takes effect September 1, 2025.