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[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5337 Reported in House (RH)]

<DOC>

                                                 Union Calendar No. 186
118th CONGRESS
  1st Session
                                H. R. 5337

                          [Report No. 118-227]

To amend the Employee Retirement Income Security Act of 1974 to clarify 
    the application of prudence and exclusive purpose duties to the 
                    exercise of shareholder rights.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                           September 5, 2023

 Mrs. Houchin introduced the following bill; which was referred to the 
                Committee on Education and the Workforce

                           September 26, 2023

  Additional sponsors: Mr. Huizenga, Mr. Sessions, Mr. Grothman, Mr. 
Wilson of South Carolina, Mr. Estes, Mr. Barr, Mr. Flood, and Mr. Owens

                           September 26, 2023

  Reported with an amendment, committed to the Committee of the Whole 
       House on the State of the Union, and ordered to be printed
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]
    [For text of introduced bill, see copy of bill as introduced on 
                           September 5, 2023]

_______________________________________________________________________

                                 A BILL

 
To amend the Employee Retirement Income Security Act of 1974 to clarify 
    the application of prudence and exclusive purpose duties to the 
                    exercise of shareholder rights.

 

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Retirement Proxy Protection Act''.

SEC. 2. EXERCISE OF SHAREHOLDER RIGHTS.

    (a) In General.--Section 404 of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1104) is amended by adding at the end 
the following new subsection:
    ``(f) Exercise of Shareholder Rights.--
            ``(1) Authority to exercise shareholder rights.--
                    ``(A) In general.--The fiduciary duty to manage 
                plan assets that are shares of stock includes the 
                management of shareholder rights appurtenant to those 
                shares, including the right to vote proxies. When 
                deciding whether to exercise a shareholder right and in 
                exercising such right, including the voting of proxies, 
                a fiduciary must act prudently and solely in the 
                interests of participants and beneficiaries and for the 
                exclusive purpose of providing benefits to participants 
                and beneficiaries and defraying the reasonable expenses 
                of administering the plan. The fiduciary duty to manage 
                shareholder rights appurtenant to shares of stock does 
                not require the voting of every proxy or the exercise 
                of every shareholder right.
                    ``(B) Exception.--This subsection shall 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.
            ``(2) Requirements for exercise of shareholder rights.--A 
        fiduciary, when deciding whether to exercise a shareholder 
        right and when exercising a shareholder right--
                    ``(A) shall--
                            ``(i) act solely in accordance with the 
                        economic interest of the plan and its 
                        participants and beneficiaries;
                            ``(ii) consider any costs involved;
                            ``(iii) evaluate material facts that form 
                        the basis for any particular proxy vote or 
                        exercise of shareholder rights; and
                            ``(iv) maintain a record of any proxy vote, 
                        proxy voting activity, or other exercise of a 
                        shareholder right, including any attempt to 
                        influence management; and
                    ``(B) shall not subordinate the interests of 
                participants and beneficiaries in their retirement 
                income or financial benefits under the plan to any non-
                pecuniary objective, or promote non-pecuniary benefits 
                or goals unrelated to those financial interests of the 
                plan's participants and beneficiaries.
            ``(3) Monitoring.--A fiduciary shall exercise prudence and 
        diligence in the selection and monitoring of a person, if any, 
        selected to advise or otherwise assist with the exercise of 
        shareholder rights, including by providing research and 
        analysis, recommendations on exercise of proxy voting or other 
        shareholder rights, administrative services with respect to 
        voting proxies, and recordkeeping and reporting services.
            ``(4) Investment managers and proxy advisory firms.--Where 
        the authority to vote proxies or exercise other shareholder 
        rights has been delegated to an investment manager pursuant to 
        section 403(a), or a proxy voting advisory firm or other person 
        who performs advisory services as to the voting of proxies or 
        the exercise of other shareholder rights, a responsible plan 
        fiduciary shall prudently monitor the proxy voting activities 
        of such investment manager or advisory firm and determine 
        whether such activities are in compliance with paragraphs (1) 
        and (2).
            ``(5) Voting policies.--
                    ``(A) In general.--In deciding whether to vote a 
                proxy pursuant to this subsection, the plan fiduciary 
                may adopt a proxy voting policy, including a safe 
                harbor proxy voting policy described in subparagraph 
                (B), providing that the authority to vote a proxy shall 
                be exercised pursuant to specific parameters designed 
                to serve the economic interest of the plan.
                    ``(B) Safe harbor voting policy.--With respect to a 
                decision not to vote a proxy, a fiduciary shall satisfy 
                the fiduciary responsibilities under this subsection if 
                such fiduciary adopts and is following a safe harbor 
                proxy voting policy that--
                            ``(i) limits voting resources to particular 
                        types of proposals that the fiduciary has 
                        prudently determined are substantially related 
                        to the business activities of the issuer or are 
                        expected to have a material effect on the value 
                        of the plan investment; or
                            ``(ii) establishes that the fiduciary will 
                        refrain from voting on proposals or particular 
                        types of proposals when the assets of a plan 
                        invested in the issuer relative to the total 
                        assets of such plan are below 5 percent (or, in 
                        the event such assets are under management, 
                        when the assets under management invested in 
                        the issuer are below 5 percent of the total 
                        assets under management).
                    ``(C) Exception.--No proxy voting policy adopted 
                pursuant to this paragraph shall preclude a fiduciary 
                from submitting a proxy vote when the fiduciary 
                determines that the matter being voted on is expected 
                to have a material economic effect on the investment 
                performance of a plan's portfolio (or the investment 
                performance of assets under management in the case of 
                an investment manager); provided, however, that in all 
                cases compliance with a safe harbor voting policy shall 
                be presumed to satisfy fiduciary responsibilities with 
                respect to decisions not to vote.
            ``(6) Review.--A fiduciary shall periodically review any 
        policy adopted under this subsection.''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply to an exercise of shareholder rights occurring on or after 
January 1, 2024.
                                                 Union Calendar No. 186

118th CONGRESS

  1st Session

                               H. R. 5337

                          [Report No. 118-227]

_______________________________________________________________________

                                 A BILL

To amend the Employee Retirement Income Security Act of 1974 to clarify 
    the application of prudence and exclusive purpose duties to the 
                    exercise of shareholder rights.

_______________________________________________________________________

                           September 26, 2023

  Reported with an amendment, committed to the Committee of the Whole 
       House on the State of the Union, and ordered to be printed
```