Trustee Voting of Stock Held as General Investment in Plan

[Guest Edward McElroy]

A Company maintains a profit sharing plan. Employer stock represents approximately 5% of the Plan's assets in the trust. Assets are held as a general investment and are not individually allocated to participant accounts. Should the bank as trustee vote this stock in connection with proxies to comply with ERISA fiduciary requirements? Any thoughts? Thanks. Ed

[QDROphile]

Absent any arrangements to the contrary, the trustee, as legal owner, exercises ownership functions, such as voting and granting proxies. Other arrangements are possible, such as voting by the person responsible for plan investment decisions. The arrangements should be properly authorized and documented. The fiduciary with responsibility for investments has the duty to monitor voting if the fiduciary does not directly exercise that function. No definitive guidance on what constitiutes proper monitoring. The voting and monitoring duties apply to all stock assets, not just employer stock. Passive institutional trustees usually will not exercise discretion, which is required for stock voting. Their standard trust documents will specify that they are to be directed with respect to such matters.