DEFC14A: Neuberger Berman Funds Face Proxy Fight as Saba Capital Nominates Directors

Neuberger Berman Municipal Fund Inc. and Neuberger Berman Next Generation Connectivity Fund Inc. are urging stockholders to vote for the Board's nominees amidst a challenge from Saba Capital Master Fund, Ltd.

Summary

• Neuberger Berman Municipal Fund Inc. (NBH) and Neuberger Berman Next Generation Connectivity Fund Inc. (NBXG) are holding a Joint Annual Meeting of Stockholders on August 16, 2024.
• Saba Capital Master Fund, Ltd. has nominated an individual to serve as a director on the Board of Directors of each Fund, who is not endorsed by the Board.
• Stockholders are being asked to vote FOR the election of the Boards nominees, who are current Directors.
• The meeting will address the election of three Class I Directors for each Fund, with terms expiring in 2027.
• Two Class I Directors, Marc Gary and Martha C. Goss, will be elected by common and preferred stockholders voting together.
• One Class I Director, Michael M. Knetter, will be voted on separately by preferred stockholders of NBH and common stockholders of NBXG.
• Stockholders of record as of May 20, 2024, are entitled to vote.
• The Board urges stockholders to use the WHITE proxy card and NOT to sign or return any proxy card sent by Saba.
• The Funds WHITE proxy cards will include only the Funds three director nominees, which comprise a full slate of Class I Director nominees.
• Sabas proxy cards will include only the one Hedge Fund Nominee, and none of the Funds nominees, which does not constitute a full slate of directors of any class.
• Fund stockholders may only vote on either the Funds' white proxy cards or Saba's gold proxy cards.
• The Funds have engaged EQ Fund Solutions, LLC to assist in the solicitation of proxies.
• Municipal Fund and Next Generation Connectivity Fund will pay EQ a fee estimated to be $52,735 and $274,497, respectively.
• The Funds estimate total expenditures relating to the proxy solicitation to be $272,673 for Municipal Fund and $787,249 for Next Generation Connectivity Fund.

Sentiment

Score: 5

Explanation: The document is primarily informational and procedural, with a neutral tone. The contested election introduces a slightly negative element, but the overall sentiment is balanced.

Positives

• The Board is actively engaging with stockholders to ensure their voices are heard in the election process.
• The incumbent directors have experience protecting fund stockholders interests.
• The incumbent directors regularly evaluate issues unique to closed-end funds, including the discount of a closed-end funds market price relative to its net asset value per share (NAV), and have approved a variety of actions designed to enhance investor value and increase the Funds competitiveness in the secondary market, which may narrow the discount between a Funds market price and its NAV.
• The Board highlights the experience and qualifications of the incumbent directors, emphasizing their familiarity with the Funds and the financial services sector.

Negatives

• The contested election introduces uncertainty and requires the Funds to expend resources on proxy solicitation.
• Saba Capital's nomination of a director suggests potential disagreement with the current Board's strategies or performance.
• The Funds are urging stockholders NOT to sign or return any proxy card sent by Saba, indicating a potentially contentious relationship.

Risks

• The contested election could lead to changes in the Board's composition and potentially alter the Funds' strategies.
• Disagreement between the Board and a significant shareholder like Saba Capital could create instability.
• The outcome of the vote could impact the Funds' ability to effectively manage their investments and achieve their objectives.
• The Funds are not responsible for the accuracy of any information provided by or relating to the Saba Hedge Fund, Saba or the Hedge Fund Nominee contained in solicitation material filed or disseminated by or on behalf of Saba, or any other statements that Saba may make.

Future Outlook

The document outlines the process for the upcoming Joint Annual Meeting and the election of directors, but does not provide specific forward-looking statements regarding the Funds' financial performance or investment strategies beyond the election.

Management Comments

• The Board urges 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 WHITE proxy card.
• Each Board does NOT endorse the Hedge Fund Nominee.
• Each Board urges you NOT to sign or return any proxy card sent to you by Saba.
• The Boards do NOT endorse the Hedge Fund Nominee.

Industry Context

The proxy contest reflects a broader trend of activist investors seeking to influence the management and direction of closed-end funds. Saba Capital is known for its activism in this space, often targeting funds trading at a discount to their net asset value.

Comparison to Industry Standards

• Proxy contests are not uncommon in the closed-end fund industry, particularly when funds trade at a persistent discount to NAV.
• Other activist investors, such as Bulldog Investors and Karpus Investment Management, have also engaged in similar campaigns.
• The level of director compensation is generally in line with industry standards for closed-end funds of similar size and complexity.
• The Funds' committee structure and risk management oversight are consistent with best practices for regulated investment companies.

Stakeholder Impact

• The outcome of the director election will directly impact the Funds' governance and strategic direction.
• Shareholders' investment value could be affected by changes in the Board's composition and policies.
• Employees of Neuberger Berman may be indirectly affected by any shifts in the Funds' management or investment strategies.

Next Steps

• Stockholders need to review the proxy materials and vote using the WHITE proxy card.
• The Funds will continue to solicit proxies to ensure a quorum and favorable outcome for their director nominees.
• The Joint Annual Meeting will be held on August 16, 2024, where the election results will be determined.

Key Dates

Keywords

proxy, directors, election, Neuberger Berman, Saba Capital, stockholders, fund