On December 11, 2020, the United States Department of Labor (“DOL”) announced a final rule establishing a regulatory framework for trustees of private benefit plans to follow when exercising shareholder rights, including voting by proxy, and select and monitor proxy advisory firms. .
The DOL said the final rule seeks to protect the interests of participants and beneficiaries by: (1) confirming that proxy voting decisions and other exercises of shareholder rights should be in the best interests and sole aim to provide a benefit plan for participants and beneficiaries considering the impact of all costs involved; (2) ensure that the plan trustees do not subordinate the interests of members and beneficiaries in their retirement income or financial benefits under the plan to any non-monetary objective, or promote non-monetary advantages or objectives. pecuniary; and (3) improving fiduciary practices relating to the selection and oversight of proxy advisory firms.
Essentially, the final rule prohibits pension plan trustees from voting by proxy that advance social or political goals, unless that vote is in the best financial interests of retirees. It also clarifies that trustees are not required to vote all proxies and, in some cases, are required to abstain from voting. That is, if a responsible trustee reasonably determines that the cost of the vote (including the cost of research, if necessary, to determine how to vote) is likely to exceed the expected economic benefits of the vote, the trustee has an obligation to s ‘abstain from voting.
The final rule faces opposition from a coalition of Democratic lawmakers, who announced they would table legislation in January to overturn the regulations.
The final rule is effective 30 days after publication in the Federal Register and applies to exercises of shareholder rights after that date. The final rule includes compliance dates extended to January 31, 2022, for certain requirements of the record keeping and proxy voting policy, subject to the conditions set out in the rule.
© 2021 Foley & Lardner srlRevue nationale de droit, volume X, number 349