(b)lines Ask the Experts – What to Do with Proxy Statements

“We just received a proxy statement, along with a request for voting, for one of the investments held in our company’s ERISA 403(b) plan. What should we do with it?”

Michael A. Webb, vice president, Cammack Retirement Group, answers:     

Your question is a timely one, since we are in the midst of proxy season, the period from mid-April to mid-June when the vast majority of proxy statements are delivered to shareholders.

For the unfamiliar, a proxy statement is a statement required of a firm when soliciting votes from shareholders. The statement is filed with the Securities and Exchange Commission in advance of a company’s annual meeting.

It is not a requirement that the plan vote each proxy and a number of factors, including the expense related to properly reviewing and voting the proxy, should generally be considered. Typically, the plan’s trustee is the one who votes the proxy. However, 403(b) plans rarely contain trusts, so there is often no trustee to vote proxies.

Fortunately, the plan document and/or investment policy can designate an alternate fiduciary to vote the proxy, such as the plan’s investment manager if applicable (though investment managers are a rarity in participant-directed 403(b) plans as well). The plan should vote the proxy in a manner consistent with the plan’s investment policy in general or the statement of proxy voting policy contained within the plan’s investment policy, in particular. It should be noted that a plan can also provide that the right to vote proxies is passed through to participants.

Proxies can be complicated, and if there is any doubt as to who should be voting the proxy, as well as the procedures that govern the manner in which the proxy should be voted, outside counsel with specific expertise in such matters should be consulted.

Thank you for your question!


NOTE: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.  

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