Bill > AB767

Introduced Session

This bill creates requirements and limitations applicable to the State of Wisconsin Investment Board (SWIB) in voting of its securities ownership interests for assets of the Wisconsin Retirement System (WRS) and the boards of the retirement systems of the City and County of Milwaukee in voting of their securities ownership interests for assets of their respective retirement systems. Investment Board Under current law, with limited exceptions, the standard of responsibility applied to SWIB when SWIB manages money and property is 1) to manage the money and property with the care, skill, prudence, and diligence under the circumstances of a prudent person acting in a similar capacity; 2) to diversify investments in order to minimize the risk of large losses; and 3) to administer assets of each trust or fund solely for the purpose of ensuring the fulfillment of the purpose of each trust or fund at a reasonable cost and not for any other purpose. SWIB manages WRS assets in the core retirement investment trust and variable retirement investment trust. This bill requires SWIB, in managing WRS assets, to exercise its voting authority as to all shares held directly or indirectly by SWIB for the benefit of WRS participants and in the sole economic interest of WRS participants. The bill defines “sole economic interest” as investment with the objective of maximizing risk- adjusted investment returns of WRS participants over a time horizon consistent with the risk management profile for the WRS assets. There is a presumption that SWIB has complied with this duty with respect to a shareholder-sponsored proposal if SWIB votes consistently with the recommendation of the security issuer’s board of directors and a majority of the these directors are independent directors. A “shareholder-sponsored proposal” is defined as a proposal submitted to a security issuer by a shareholder under provisions of federal law. If SWIB votes in a manner inconsistent with the recommendation of the security issuer’s board of directors, SWIB is presumed to have complied with its duty if any of the following applies: 1) SWIB conducts and documents an economic analysis that satisfies certain requirements (discussed below) and that demonstrates that SWIB’s vote is in the sole economic interest of WRS participants; or 2) a third party conducts and documents such an economic analysis on behalf of SWIB and SWIB determines the economic analysis adequately demonstrates that SWIB’s vote is in the sole economic interest of WRS participants. SWIB may not vote in a manner that subordinates the economic interest of WRS participants to any environmental, social, policy, governance, or ideological goal. SWIB also may not vote in a manner that promotes any environmental, social, policy, governance, or ideological goal unless, based on an economic analysis, SWIB determines that the vote is in the sole economic interest of WRS participants. The bill also governs SWIB’s use of proxy advisory firms, which are firms that engage in the business of providing proxy voting advice, research, analysis, ratings, or recommendations to securities owners or issuers. If SWIB engages the services of a proxy advisory firm to provide proxy voting advice with respect to shareholder- sponsored proposals, SWIB may not adopt a recommendation of the proxy advisory firm unless the proxy advisory firm bases its recommendation on the sole economic interest of WRS participants. There is a presumption that a proxy advisory firm's recommendation is based on the sole economic interest of WRS participants if the recommendation is consistent with the recommendation of the security issuer’s board of directors and a majority of these directors are independent directors. However, an exception allows SWIB to adopt a proxy advisory firm’s recommendation that is inconsistent with the recommendation of the issuer’s board of directors if the proxy advisory firm conducted and documented an economic analysis demonstrating that its recommendation is in the sole economic interest of WRS participants and provided this economic analysis to the board. This exception does not apply if the proxy advisory firm’s recommendation relates to a matter of executive compensation or a decision to pursue adjudication of a business dispute in court. Under the bill, if SWIB engages the services of a proxy advisory firm to provide proxy voting advice with respect to a company-sponsored resolution relating to executive compensation requiring shareholder approval (say-on-pay proposal), SWIB may not adopt a recommendation of the proxy advisory firm that 1) undermines the use of discretion by an independent compensation committee of the issuer’s board of directors; 2) is based on prior shareholder support levels and not on the economic interest of participants; or methodologies that are not consistent with generally accepted accounting principles. The bill also prohibits SWIB from engaging the services of a proxy advisory firm to provide proxy voting advice if there is an actual or potential conflict of interest that could reasonably be expected to affect the objectivity or reliability of the proxy advisory firm’s advice. Under the bill, if an economic analysis of a shareholder-sponsored proposal is necessary, the economic analysis must be in writing, include an analysis demonstrating the factors considered in evaluating the economic impact of the shareholder-sponsored proposal, and address specified factors. At least once every three years, SWIB must conduct backtesting of its economic analyses to determine how well its models, procedures, and processes perform in predicting the sole economic interest of WRS participants and must make adjustments as necessary to ensure the accuracy and integrity of its economic analyses. Current law requires SWIB to report annually to the Department of Employee Trust Funds certain information regarding WRS assets. This bill requires SWIB to include within this report specified information related to shareholder-sponsored proposals, including certain information related to SWIB’s votes, its economic analyses, and proxy advisory firm recommendations. This information is subject to the open records law. SWIB must also include information in this report related to its backtesting of its economic analyses. The bill provides that the attorney general, the state treasurer, and any district attorney may enforce the provisions of the bill, including by conducting investigations and bringing court actions for injunctive relief. The bill also allows a WRS participant to bring a civil action against SWIB to enforce the provisions of the bill. The WRS participant may seek injunctive relief and may recover actual damages, court costs, and reasonable attorney fees. An action may not be commenced more than three years after the date the WRS participant discovers or should have discovered the violation. Under current law, SWIB annually assesses the funds it manages, including WRS assets, to cover SWIB’s expenses in managing these funds. SWIB must provide notice of each assessment and pays the assessment from the current income of the applicable fund. The bill requires SWIB to reduce its assessment against WRS assets if SWIB violates the provisions of the bill. The amount of the reduction for each violation is 5 percent of the increase in SWIB’s assessment in the prior two- year period. Retirement funds of first-class cities and populous counties Under current law, the board of a governmental retirement system in a county with a population of 500,000 or more (currently only Milwaukee County) must invest the funds of the system subject to all of the conditions, limitations, and restrictions imposed by law on SWIB in making and disposing of the investments of the Wisconsin retirement fund. Also under current law, the board of a retirement system of a first-class city (currently only the City of Milwaukee) must invest the funds of the system subject to all of the conditions, limitations, and restrictions imposed by law on life insurance companies in this state. Under the bill, the board of the retirement system of Milwaukee County and the board of the retirement system of the City of Milwaukee are required to follow all the same requirements described above for SWIB, including reporting to ETF. The bill also provides that the attorney general, the state treasurer, and the district attorney of Milwaukee County may enforce the provisions of the bill with respect to the retirement systems of the City and County of Milwaukee. The bill also allows a participant of the retirement system of Milwaukee County or the City of Milwaukee to bring a civil action against the board of the respective system to enforce the provisions of the bill. The participant may seek injunctive relief and may recover actual damages, court costs, and reasonable attorney fees. An action may not be commenced more than three years after the date the participant discovers or should have discovered the violation. For further information see the state fiscal estimate, which will be printed as an appendix to this bill.

AI Summary

Committee Categories

Elijah Behnke (R)*,  Barbara Dittrich (R)*,  Rick Gundrum (R)*,  Dan Knodl (R)*,  Dave Maxey (R)*,  Dave Murphy (R)*,  Amanda Nedweski (R)*,  Chuck Wichgers (R)*,  Chris Kapenga (R),  Steve Nass (R),  Van Wanggaard (R), 

Fiscal estimate received (on 01/12/2026)

Official Document