Final DOL Rule Imposes Fiduciary Limitations on Social Investing

The DOL recently issued a final rule (“Rule”) providing guidance on the long-standing issue of whether ERISA fiduciaries are permitted to consider non-pecuniary factors while making investments (or selecting investment funds) that promote one or more environmental, social or corporate governance goals (so called “ESG Investments”).  The preamble to the Rule acknowledges that ERISA fiduciaries must act solely in the interest of plan participants/beneficiaries and that courts have consistently interpreted this interest to refer to pecuniary, rather than non-pecuniary benefits.

Prior DOL ESG Investment guidance also required ERISA fiduciaries to place financial returns over other non-financial goals and prohibited a fiduciary from subordinating the interests of participants/beneficiaries in their retirement income to “unrelated objectives.”  However, the DOL previously stated that, when comparing ESG and non-ESG investments, if the financial returns were comparable, it was not a breach of fiduciary duty to select the ESG Investment.  Read More ›

Posted in Employee Benefits, Qualified Retirement Plans | Tagged , , , , , , ,

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Say on Pay Failure Results 2017

Of the 7% of Russell 3000 companies that received “against” vote recommendations from ISS on their say on pay proposals this 2017 proxy season, some of the cited reasons for the negative vote recommendations from ISS consisted of the following:

  • Pay for failure (i.e., pay for performance disconnect).
  • Lack of rigorous performance goals.
  • A substantial portion of granted equity awards were not performance-based.
  • Presence of an ISS “problematic pay practice” including:
    • Abnormally large bonus payments without proper link to performance.
    • Change in control payments exceed 3 times base salary/target bonus.
    • Single trigger change in control or severance payments.

A full list of the ISS “problematic pay practices” can be found here. Read More ›

Posted in Employee Benefits, Executive Compensation | Tagged , , , , , , ,

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