DEF: Neuberger Berman Funds Announce Joint Annual Stockholder Meeting for Director Elections and Governance Review

Neuberger Berman Municipal Fund Inc. and Neuberger Berman Next Generation Connectivity Fund Inc. will hold a joint annual meeting on July 17, 2025, to elect directors and address corporate governance matters.

Summary

• A Joint Annual Meeting of Stockholders for Neuberger Berman Municipal Fund Inc. (NBH) and Neuberger Berman Next Generation Connectivity Fund Inc. (NBXG) will be held on July 17, 2025, at 2:00 p.m. Eastern Time in New York City.
• The primary purpose of the meeting is the election of Class I and Class II Directors for both Funds, with terms expiring in 2027 and 2028, respectively.
• For Municipal Fund, stockholders will vote on the election of four Class II Directors (Michael J. Cosgrove, Deborah C. McLean, Paul M. Nakasone, and Ami G. Kaplan) and two Class I Directors (Marc Gary and Martha C. Goss). Ami G. Kaplan will be voted on separately by preferred stockholders.
• For Next Generation Connectivity Fund, stockholders will vote on the election of four Class II Directors (Michael J. Cosgrove, Deborah C. McLean, Paul M. Nakasone, and Ami G. Kaplan) and three Class I Directors (Marc Gary, Martha C. Goss, and Michael M. Knetter).
• The Boards emphasize the importance of continuity and stability, with directors having prior experience and knowledge of the financial services sector.
• The Funds' Boards oversee risk management, including investment, counterparty, valuation, liquidity, reputational, operational, cybersecurity, and legal/compliance risks.
• Neuberger Berman Investment Advisers LLC (NBIA) serves as the investment manager and administrator for both Funds, managing approximately $515 billion in assets as of March 31, 2025.
• Audit fees for Municipal Fund decreased from $63,900 in fiscal year 2023 to $51,300 in fiscal year 2024, while for Next Generation Connectivity Fund, they remained constant at $53,300.
• Tax fees for Municipal Fund were $13,960 for both fiscal years 2023 and 2024, and for Next Generation Connectivity Fund, they were $20,790 for both years.
• Total compensation for Independent Directors from the Neuberger Berman fund complex for the calendar year ended December 31, 2024, ranged from $135,000 to $360,000, with an annual retainer of $200,000 plus meeting fees.
• As of April 23, 2025, Saba Capital Management, L.P. held 6.49% of Municipal Fund's common stock and 9.69% of Next Generation Connectivity Fund's common stock.
• Bank of America Corporation held 100% of Municipal Fund's preferred stock (2,279 shares) as of April 23, 2025.

Sentiment

Score: 7

Explanation: The document presents a strong and well-structured corporate governance framework with experienced directors and proactive measures to enhance shareholder value. The detailed committee structure and independent oversight are positive. The only negative is a past compliance issue with late Section 16(a) filings, which is minor in the context of overall governance and operations.

Positives

• The Boards are structured with three classes of Directors, promoting continuity and stability through experienced leadership.
• Directors have extensive experience in financial services, asset management, and corporate governance, with many serving on multiple Neuberger Berman funds.
• The Boards actively evaluate issues unique to closed-end funds, such as market price discounts to NAV, and have approved measures like managing distribution rates, tender option programs, fund mergers, and leverage structure management to enhance investor value.
• A robust corporate governance framework is in place, including an Independent Director serving as Chair and multiple specialized committees (Audit, Closed-End Funds, Contract Review, Ethics and Compliance, Executive, Governance and Nominating, Investment Performance).
• Independent Directors regularly meet without management present and are advised by independent legal counsel, ensuring objective oversight.
• The Funds have a clear retirement policy for Directors (age 77), ensuring board refreshment while maintaining experience.
• The Audit Committees are composed entirely of Independent Directors, with identified financial experts, ensuring strong oversight of financial reporting and auditing processes.

Negatives

• There was one late Section 16(a) filing for Municipal Fund, relating to thirty-seven transactions from 2012 through 2023 by Bank of America Corp /DE/, Merrill Lynch, Pierce, Fenner & Smith Inc., and BOFA Securities, Inc., indicating a past compliance lapse.

Risks

• Investment risk: The inherent risk associated with the performance of the Funds' investments.
• Counterparty risk: Risk arising from the inability of a counterparty to fulfill its obligations.
• Valuation risk: Risk related to the accurate valuation of the Funds' assets.
• Liquidity risk: Risk that the Funds may not be able to sell assets quickly enough to meet obligations.
• Reputational risk: Risk of damage to the Funds' reputation.
• Risk of operational failure or lack of business continuity: Risks related to disruptions in operations or inability to maintain business functions.
• Cybersecurity risk: Risk of cyberattacks or data breaches impacting the Funds' operations or data.
• Legal, compliance and regulatory risk: Risks associated with adherence to laws, regulations, and compliance policies.
• Limitations of risk management programs: The Boards acknowledge that not all risks can be identified, some cannot be practically or cost-effectively mitigated, and certain risks (like investment risks) must be borne to achieve goals, and that risk reports are summaries, and risks can be evaluated only as probabilities.

Future Outlook

The document primarily focuses on the upcoming annual meeting and director elections, with no explicit forward-looking financial guidance or strategic outlook beyond the ongoing commitment to enhance investor value and competitiveness in the secondary market for closed-end funds. The Boards will continue to evaluate issues unique to closed-end funds, including managing distribution rates, approving discount mitigation measures, considering fund mergers, actively managing leverage structures, and making changes to investment strategies to enhance investor return potential without undue risk.

Management Comments

• "We urge you to review the information in the accompanying proxy statement and vote FOR the election of the nominees of the Board of Directors of each Fund using the enclosed proxy card(s)."
• "Each Board believes that the incumbents are well suited for service on the Board due to their knowledge and familiarity with each Fund as a result of their prior service as Directors, their knowledge of the financial services sector, and their substantial experience in serving as directors or trustees, officers, or advisers of public companies and business organizations, including other investment companies."
• "Each Board believes that its leadership structure, including its Independent Chair and its committee structure, is appropriate in light of, among other factors, the asset size of the fund complex overseen by the Board, the nature and number of funds overseen by the Board, the number of Directors, the range of experience represented on the Board and the Boards responsibilities."
• "The Boards recognize that not all risks that may affect the Funds can be identified, that it may not be practical or cost-effective to eliminate or mitigate certain risks, that it may be necessary to bear certain risks (such as investment-related risks) to achieve the Funds goals, and that the processes, procedures and controls employed to address certain risks may be limited in their effectiveness."

Industry Context

This proxy statement reflects standard corporate governance practices for publicly traded investment funds, particularly closed-end funds. The emphasis on addressing the discount of market price to net asset value (NAV) is a common challenge and strategic focus for closed-end funds, as they often trade at discounts to their underlying assets. The proposed actions, such as managing distribution rates, considering tender offers, and optimizing leverage, are typical strategies employed by closed-end fund boards to enhance shareholder value and narrow these discounts. The detailed committee structure and emphasis on independent directors align with best practices in the investment management industry for robust oversight and compliance.

Comparison to Industry Standards

• The Funds' board structure, with a majority of independent directors and an independent chair, aligns with leading corporate governance standards for investment companies, similar to practices seen in large mutual fund complexes like Vanguard or Fidelity.
• The proactive measures to address the discount of market price to NAV, such as managing distribution rates and considering tender offers, are common strategies employed by closed-end funds across the industry, including those managed by firms like BlackRock or Eaton Vance, to enhance shareholder value.
• The compensation structure for independent directors, including an annual retainer and per-meeting fees, is a standard practice in the investment fund industry, comparable to compensation models at other large fund complexes.
• The detailed committee structure (Audit, Closed-End Funds, Contract Review, Ethics and Compliance, Executive, Governance and Nominating, Investment Performance) demonstrates a comprehensive approach to oversight, mirroring the robust governance frameworks of well-established financial institutions.
• The disclosure of audit and tax fees, and the Audit Committee's pre-approval policies, are in line with SEC and PCAOB requirements, demonstrating transparency consistent with industry best practices for publicly traded funds.

Management Changes

Corporate Governance

Legal Proceedings

• One late filing was identified for Municipal Fund relating to thirty-seven Section 16(a) transactions from 2012 through 2023 by Bank of America Corp /DE/, Merrill Lynch, Pierce, Fenner & Smith Inc., and BOFA Securities, Inc.

Related Party Transactions

• Joseph V. Amato, an interested Director, serves as Chief Executive Officer and President of the funds in the Neuberger Berman fund complex and as Neuberger Berman's Chief Investment Officer for equity investments. He receives no compensation from the Funds for his director role.
• NBIA, an affiliate of Neuberger Berman, serves as the investment manager and administrator to each Fund.

Stakeholder Impact

• **Shareholders:** The election of directors directly impacts the governance and strategic direction of the Funds. Measures to narrow the discount between market price and NAV are intended to enhance shareholder value. The late Section 16(a) filing, while a compliance issue, is unlikely to have a material impact on shareholders given its historical nature and the number of transactions involved.
• **Management:** The Board's oversight, particularly through committees like the Ethics and Compliance Committee, influences management's operational and compliance frameworks. The appointment of new key officers (CCO, CLO) reflects ongoing management adjustments.
• **Employees:** The document does not directly address employee impact, but the stability provided by the board structure and governance practices indirectly benefits employees by fostering a well-managed organization.
• **Customers (Fund Investors):** The focus on enhancing investor value and maintaining robust risk management and compliance frameworks aims to protect and serve the interests of the Funds' investors.
• **Regulatory Authorities:** The detailed disclosures and adherence to SEC filing requirements demonstrate compliance with regulatory obligations, which is crucial for maintaining trust with regulatory bodies.

Next Steps

• Stockholders are urged to authorize a proxy to vote their shares in advance of the Meeting by methods described in the Proxy Materials.
• Stockholders may attend the Joint Annual Meeting in person on July 17, 2025, at 2:00 p.m. Eastern Time at the offices of Neuberger Berman Investment Advisers LLC in New York, New York.
• Stockholders wishing to nominate Directors or make proposals for the 2026 Annual Meeting must provide notice to the Secretary between January 14, 2026, and February 13, 2026.

Key Dates

Keywords

Neuberger Berman, Municipal Fund, Next Generation Connectivity Fund, SEC filing, Proxy Statement, Director election, Corporate governance, Closed-end fund, Investment management, Risk management, Audit committee, Shareholder meeting, Board of Directors, NYSE American, NYSE, NBH, NBXG