I 

118TH CONGRESS 

1ST SESSION H. R. 5337 

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 

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. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Retirement Proxy Pro5 tection Act’’. 

6 SEC. 2. EXERCISE OF SHAREHOLDER RIGHTS. 

7 (a) IN GENERAL.—Section 404 of the Employee Re8 tirement Income Security Act of 1974 (29 U.S.C. 1104) 


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1 is amended by adding at the end the following new sub2 section: 

3 ‘‘(f) EXERCISE OF SHAREHOLDER RIGHTS.— 

4 ‘‘(1) AUTHORITY TO EXERCISE SHAREHOLDER

5 RIGHTS.— 

6 ‘‘(A) IN GENERAL.—The fiduciary duty to 

7 manage plan assets that are shares of stock in8 cludes the management of shareholder rights 

9 appurtenant to those shares, including the right 

10 to vote proxies. When deciding whether to exer11 cise a shareholder right and in exercising such 

12 right, including the voting of proxies, a fidu13 ciary must act prudently and solely in the inter14 ests of participants and beneficiaries and for 

15 the exclusive purpose of providing benefits to 

16 participants and beneficiaries and defraying the 

17 reasonable expenses of administering the plan. 

18 The fiduciary duty to manage shareholder 

19 rights appurtenant to shares of stock does not 

20 require the voting of every proxy or the exercise 

21 of every shareholder right. 

22 ‘‘(B) EXCEPTION.—This subsection shall 

23 not apply to voting, tender, and similar rights 

24 with respect to securities that are passed 

25 through pursuant to the terms of an individual 


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1 account plan to participants and beneficiaries 

2 with accounts holding such securities. 

3 ‘‘(2) REQUIREMENTS FOR EXERCISE OF SHARE4 HOLDER RIGHTS.—A fiduciary, when deciding 

5 whether to exercise a shareholder right and when ex6 ercising a shareholder right— 

7 ‘‘(A) shall— 

8 ‘‘(i) act solely in accordance with the 

9 economic interest of the plan and its par10 ticipants and beneficiaries; 

11 ‘‘(ii) consider any costs involved; 

12 ‘‘(iii) evaluate material facts that 

13 form the basis for any particular proxy 

14 vote or exercise of shareholder rights; and 

15 ‘‘(iv) maintain a record of any proxy 

16 vote, proxy voting activity, or other exer17 cise of a shareholder right, including any 

18 attempt to influence management; and 

19 ‘‘(B) shall not subordinate the interests of 

20 participants and beneficiaries in their retire21 ment income or financial benefits under the 

22 plan to any non-pecuniary objective, or promote 

23 non-pecuniary benefits or goals unrelated to 

24 those financial interests of the plan’s partici25 pants and beneficiaries. 


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1 ‘‘(3) MONITORING.—A fiduciary shall exercise 

2 prudence and diligence in the selection and moni3 toring of a person, if any, selected to advise or oth4 erwise assist with the exercise of shareholder rights, 

5 including by providing research and analysis, rec6 ommendations on exercise of proxy voting or other 

7 shareholder rights, administrative services with re8 spect to voting proxies, and recordkeeping and re9 porting services. 

10 ‘‘(4) INVESTMENT MANAGERS AND PROXY

11 FIRMS.—Where the authority to vote proxies or exer12 cise shareholder rights has been delegated to an in13 vestment manager pursuant to section 403(a), or a 

14 proxy voting firm or other person who performs ad15 visory services as to the voting of proxies or the ex16 ercise of shareholder rights, a responsible plan fidu17 ciary shall prudently monitor the proxy voting activi18 ties of such investment manager or advisory firm 

19 and determine whether such activities are in compli20 ance with paragraphs (1) and (2). 

21 ‘‘(5) VOTING POLICIES.— 

22 ‘‘(A) IN GENERAL.—In deciding whether to 

23 vote a proxy pursuant to this subsection, the 

24 plan fiduciary may adopt a proxy voting policy, 

25 including a safe harbor proxy voting policy deVerDate Sep 11 2014 20:30 Sep 05, 2023 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H5337.IH H5337

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1 scribed in subparagraph (B), providing that the 

2 authority to vote a proxy shall be exercised pur3 suant to specific parameters designed to serve 

4 the economic interest of the plan. 

5 ‘‘(B) SAFE HARBOR VOTING POLICY.— 

6 With respect to a decision not to vote a proxy, 

7 a fiduciary shall satisfy the fiduciary respon8 sibilities under this subsection if such fiduciary 

9 adopts and is following a safe harbor proxy vot10 ing policy that— 

11 ‘‘(i) limits voting resources to par12 ticular types of proposals that the fiduciary 

13 has prudently determined are substantially 

14 related to the business activities of the 

15 issuer or are expected to have a material 

16 effect on the value of the plan investment; 

17 or 

18 ‘‘(ii) establishes that the fiduciary will 

19 refrain from voting on proposals or par20 ticular types of proposals when the assets 

21 of a plan invested in the issuer relative to 

22 the total assets of such plan are below 5 

23 percent (or, in the event such assets are 

24 under management, when the assets under 

25 management invested in the issuer are 


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1 below 5 percent of the total assets under 

2 management). 

3 ‘‘(C) EXCEPTION.—No proxy voting policy 

4 adopted pursuant to this paragraph shall pre5 clude a fiduciary from submitting a proxy vote 

6 when the fiduciary determines that the matter 

7 being voted on is expected to have a material 

8 economic effect on the investment performance 

9 of a plan’s portfolio (or the investment perform10 ance of assets under management in the case of 

11 an investment manager); provided, however, 

12 that in all cases compliance with a safe harbor 

13 voting policy shall be presumed to satisfy fidu14 ciary responsibilities with respect to decisions 

15 not to vote. 

16 ‘‘(6) REVIEW.—A fiduciary shall periodically re17 view any policy adopted under this subsection.’’. 

18 (b) EFFECTIVE DATE.—The amendments made by 

19 subsection (a) shall apply to an exercise of shareholder 

20 rights occurring on or after January 1, 2024. 

Æ 


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