Voting employer stock

[Guest krijowri]

I understand the rules for the ability of a plan to permit proxy or pass-through voting of employee stock, but is anyone aware of any DOL or Treasury rules that mandate a particular procedure for collecting and effectuating participant votes? For instance, would it be appropriate to merely send paperwork to each participant or is there a particular procedure or specific guidelines that must be followed? This is fairly urgent, so any immediate feedback would be very helpful. Also, please provide citations if possible...

EDIT: typo

[Peter Gulia]

If one wants ERISA 404© protection concerning participant-directed investment in employer securities, passing through voting rights isn't permissive, but rather necessary. 29 C.F.R. 2550.404c-1(d)(2)(ii)(E)(4)(vi).

Also, the plan must have procedures that are designed and implemented to prevent the employer and its affiliates from knowing how participants voted, or even whether a participant invested or didn't in employer securities. See 29 C.F.R. 2550.404c-1(d)(2)(ii)(E)(4)(vii)-(ix).

Further, if the fiduciary responsible for the confidentiality procedures finds that there is a potential for the employer to influence participants, it must appoint an independent fiduciary for those situations. 29 C.F.R. 2550.404c-1(d)(2)(ii)(E)(4)(ix).

The only logically sound solution is to use an independent fiduciary for all stages concerning employer securities.

[Guest krijowri]

If one wants ERISA 404© protection concerning participant-directed investment in employer securities, passing through voting rights isn't permissive, but rather necessary. 29 C.F.R. 2550.404c-1(d)(2)(ii)(E)(4)(vi).

Also, the plan must have procedures that are designed and implemented to prevent the employer and its affiliates from knowing how participants voted, or even whether a participant invested or didn't in employer securities. See 29 C.F.R. 2550.404c-1(d)(2)(ii)(E)(4)(vii)-(ix).

Further, if the fiduciary responsible for the confidentiality procedures finds that there is a potential for the employer to influence participants, it must appoint an independent fiduciary for those situations. 29 C.F.R. 2550.404c-1(d)(2)(ii)(E)(4)(ix).

The only logically sound solution is to use an independent fiduciary for all stages concerning employer securities.

Thanks for the response - I am aware of those rules. I'm really looking to see if there are more specific rules on how to solicit and actually collect the votes from participants. I'm not finding anything, so I think the rules you cited above are as much guidance as there is on this topic.

[Guest erisafried]

Your mileage may vary, but the plans I work with tend to get assistance from the trustee/recordkeeper. The general process involves collecting the names of all of the participants who are eligible to vote and sending out the voting materials to them in advance of the annual meeting. Responses come back to the trustee or recordkeeper who would total up the votes and provide the results to the trustee (or whoever the plan deputizes to actually vote the shares). The designated voter then votes per the applicable shareholder voting rules adopted by the company and the plan terms (for any shares for which voting instructions were not received).