Voting of Unallocated ESOP Shares

[Guest Edward McElroy]

An employer maintains an ESOP. The Plan provides that the trustees will vote shares in accordance with participants' directions. While I'm aware of requirements set forth under the NationsBank case, what authority exists that permits trustee to vote unallocated shares under "mirror-voting" or other optional strategy? Any thoughts? Thanks. Ed

[Guest halka]

I don't think there is a "safe harbor" for mirror voting with a possible exception for "non-registration type" securities under IRC §409(e)(5). Even if the plan document calls for proportional voting of unallocated shares, it is my understanding that the trustee still has a fiduciary duty to vote the unallocated shares in the best interests of plan participants.