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 holding a joint annual meeting where stockholders will vote on the election of directors, facing a challenge from Saba Capital which has nominated its own candidate.

Summary

• Neuberger Berman Municipal Fund Inc. (NBH) and Neuberger Berman Next Generation Connectivity Fund Inc. (NBXG) will hold a Joint Annual Meeting of Stockholders on August 16, 2024.
• Stockholders will vote to elect three Class I Directors for each fund.
• Saba Capital Master Fund, Ltd. has nominated an individual to serve as a director on each Board, who is not endorsed by the Boards.
• The Boards recommend voting FOR their nominees using the WHITE proxy card and discarding any proxy cards received from Saba.
• The Boards' nominees are Marc Gary, Martha C. Goss, and Michael M. Knetter, with terms expiring in 2027.
• The document details the qualifications, experience, and other directorships held by the current directors and nominees.
• The document outlines the various committees of the Boards, including the Audit Committee, Closed-End Funds Committee, Contract Review Committee, Ethics and Compliance Committee, Executive Committee, Governance and Nominating Committee, and Investment Performance Committee.
• The document provides information on director compensation, ownership of securities, and fees billed by the independent registered public accounting firm, Ernst & Young LLP.
• The document includes information on beneficial ownership of shares, with First Trust Portfolios L.P., Saba Capital Management, L.P., and City of London Investment Group PLC holding significant positions in the Funds.
• The document outlines the process for stockholders to submit proposals for the 2025 Annual Meeting, with deadlines of February 4, 2025, for inclusion in proxy materials and January 5, 2025, to February 4, 2025, for other proposals.
• The document notes that the Funds anticipate a contested election with respect to the election of directors.

Sentiment

Score: 5

Explanation: The document is neutral in tone, providing factual information about the upcoming meeting and the contested election. The Boards' recommendation to vote for their nominees is balanced by the disclosure of Saba Capital's nominee.

Positives

• The document provides detailed information about the director nominees, allowing stockholders to make informed decisions.
• The document outlines the various committees of the Boards, demonstrating a commitment to oversight and governance.
• The document discloses the fees paid to the independent registered public accounting firm and the proxy solicitation firm, promoting transparency.
• The document provides clear instructions on how to vote and revoke proxies, ensuring stockholders can exercise their rights.

Negatives

• The contested election introduces uncertainty and potential disruption to the Funds' operations.
• The document highlights the potential for increased expenses due to the proxy solicitation efforts.
• The document notes that the Funds are not responsible for the accuracy of information provided by Saba Capital, potentially creating confusion for stockholders.

Risks

• The contested election could result in a change in the composition of the Boards, potentially impacting the Funds' strategies and performance.
• The proxy solicitation process could be costly and time-consuming, diverting resources from other important activities.
• The document notes that the Boards do not endorse the Hedge Fund Nominee, indicating a potential conflict of interest.
• The document mentions that the Funds are not responsible for the accuracy of information provided by Saba Capital, potentially creating confusion for stockholders.

Future Outlook

The document outlines the process for stockholders to submit proposals for the 2025 Annual Meeting, indicating a focus on future governance and stockholder engagement.

Management Comments

• The Boards recommend voting FOR their nominees using the WHITE proxy card and discarding any proxy cards received from Saba.
• Each Board believes that the incumbents are best suited for service on the Board due to their 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.

Industry Context

The proxy fight highlights the increasing activism of hedge funds like Saba Capital in the closed-end fund space, seeking to influence fund governance and potentially unlock value.

Comparison to Industry Standards

• Contested director elections are not uncommon in the closed-end fund industry, as activist investors seek to address perceived underperformance or governance issues.
• The level of detail provided in the proxy statement regarding director qualifications and committee structures is consistent with industry best practices for registered investment companies.
• The fees paid to the proxy solicitation firm are within the typical range for contested elections of this nature.
• The ownership percentages disclosed are typical for closed-end funds, where institutional investors often hold significant positions.

Stakeholder Impact

• The outcome of the director election could impact the Funds' investment strategies and performance, affecting shareholders.
• The proxy fight could create uncertainty for employees of Neuberger Berman, the Funds' investment manager.
• The increased expenses associated with the proxy solicitation will be borne by the Funds, potentially reducing returns for shareholders.

Next Steps

• Stockholders should review the proxy materials and vote using the WHITE proxy card.
• The Funds will continue to solicit proxies in advance of the August 16, 2024 meeting.
• The Boards will continue to engage with stockholders to address any concerns and promote their nominees.

Key Dates

Keywords

proxy, directors, election, fund, Neuberger Berman, Saba Capital, stockholders, meeting, governance, nominees