Department of Labor Issues New Guidance for Voting Company Stock in Retirement Plans
Executive Director
In Interpretive Bulletin 2016-1 (PDF), the Department of Labor issued new guidance for fiduciaries of retirement plans that have company stock as one of their investments. The guidelines are aimed at fiduciaries in public companies, but would be applicable to ESOPs as well, albeit in a limited way. It lays out guidance on when and in what ways plan fiduciaries can engage in active monitoring of company management employees as well, including establishing an investment policy specifying long-term objectives.
The Department said it was concerned that the interpretations of prior guidance (IB 94-2 in IB 2008-2) are "out of step with important domestic and international trends in investment management and have the potential to dissuade ERISA fiduciaries from exercising shareholder rights, including the voting of proxies, in areas that are increasingly being recognized as important to long-term shareholder value." This can include engagement on environmental and social goals.