Sponsors (3)
Updated 1 day ago
Last progress January 15, 2026 (3 days ago)
Requires fiduciaries of employee retirement plans to treat shareholder rights (like proxy voting) as plan assets to be exercised only for the financial benefit of participants and beneficiaries, and to do so prudently. It sets specific duties (cost consideration, factual evaluation, recordkeeping), requires monitoring of advisers and delegated managers, allows adoption of written proxy‑voting policies (including a safe‑harbor), and mandates periodic review. The rule applies to exercises of shareholder rights on or after 2026‑01‑01.
Adds a new subsection (f), titled 'Exercise of shareholder rights', to section 404 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1104).
Declares that the fiduciary duty to manage plan assets that are shares of stock includes management of shareholder rights appurtenant to those shares, including the right to vote proxies. Fiduciaries must act prudently and solely in the interests of participants and beneficiaries and for the exclusive purpose of providing benefits and defraying reasonable plan administration expenses.
Clarifies that the fiduciary duty to manage shareholder rights does not require voting every proxy or exercising every shareholder right.
States that the subsection does not apply to voting, tender, and similar rights with respect to securities that are passed through pursuant to the terms of an individual account plan to participants and beneficiaries with accounts holding such securities.
When deciding whether to exercise a shareholder right and when exercising a shareholder right, a fiduciary shall act solely in accordance with the economic interest of the plan and its participants and beneficiaries.
Last progress March 10, 2025 (10 months ago)
Introduced on March 10, 2025 by Erin Houchin
Who is affected and how:
Retirement plans and beneficiaries: Participants and beneficiaries may see changes in how their plans vote proxies and engage with issuers; the amendment channels fiduciary actions toward clear financial benefit and requires transparent documentation of voting decisions.
Plan fiduciaries and sponsors: Must update governance and compliance practices (written policies, decision records, conflict checks), increase oversight of delegates/advisers, and implement monitoring programs. This will raise administrative burden and compliance costs (legal, operational, and recordkeeping).
Investment managers and delegated fiduciaries: Managers who receive delegation to vote securities must operate under clearer monitoring standards; they should expect more oversight, contractual requirements, and reporting demands from plan clients.
Proxy advisory firms, proxy‑voting vendors, and recordkeepers: May face more detailed instructions from clients, new record requests, or contractual changes; recordkeepers may need expanded documentation systems to store voting rationales and monitoring records.
Public companies and corporate governance stakeholders: May experience shifts in voting outcomes if plans revise voting policies or more closely tie votes to narrow financial considerations; engagement practices could change depending on how plans define “financial benefit.”
Legal and litigation risk: Increased documentation requirements could lead to more ERISA litigation or enforcement inquiries over whether fiduciaries prudently followed the statute, but the safe‑harbor can reduce liability if its conditions are met.
Overall balance: The change strengthens a prudence-and‑benefit test for shareholder‑rights exercises and increases transparency and oversight obligations. That likely improves documentation and accountability but raises compliance costs and operational complexity for plan fiduciaries, delegated managers, and service providers.
Referred to the House Committee on Education and Workforce.