Yes, Plan Fiduciaries, You Can Exercise Shareholder Rights

Employee Benefits News examines legal developments that impact the employee benefits and executive compensation employers provide, including federal and state legislation, rules from federal...

By Sean Forbes

Employee benefit plan fiduciaries can exercise their shareholder rights with proxy voting as part of their fiduciary duty to manage plan assets, the Department of Labor said Dec. 28.

In Interpretive Bulletin 2016-1, the DOL gave several examples of when fiduciaries should vote their proxies:

  •  as part of the process of managing the plan’s investment in company stock unless a responsible plan fiduciary determined that the time and costs involved weren’t in the plan’s best interest,
  •  when sponsors determine there are problems with their portfolio company’s management, and
  •  to clarify issues around environmental, social and governance investments.
The bulletin replaces guidance the DOL released in 2008, which the department said may have been misunderstood and discouraged some fiduciaries from exercising their proxy voting rights.

The guidance doesn’t change plan fiduciaries’ underlying fiduciary duties, but it does indicate that they can take a more “holistic” approach to investment decisions, Lynn Dudley, senior vice president, global retirement and compensation policy at the Washington-based American Benefits Council, told Bloomberg BNA.

The 2008 guidance may have had a minor “chilling effect” for some fiduciaries, but the new guidance makes clear that “the door is open to considering things on a more holistic basis,” Dudley said.

The guidance is scheduled to be published Dec. 29 in the Federal Register.

To contact the reporter on this story: Sean Forbes in Washington at

To contact the editor responsible for this story: Jo-el J. Meyer at

CORRECTION: The story has been clarified to reflect that plan fiduciaries, which aren’t necessarily the plan sponsors, can exercise shareholder rights via proxy voting.

For More Information

Interpretive Bulletin 2016-1 is at

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