[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[S. 1677 Introduced in Senate (IS)]
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117th CONGRESS
1st Session
S. 1677
To establish a process by which participants of employee welfare plans
select guidelines to be used by the plan fiduciary for voting proxies
on securities held in investment portfolios under the plan, and for
other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
May 18, 2021
Ms. Baldwin (for herself, Mr. Sanders, Ms. Warren, Mr. Merkley, Mr.
Markey, Mr. Booker, and Mr. Blumenthal) introduced the following bill;
which was read twice and referred to the Committee on Health,
Education, Labor, and Pensions
_______________________________________________________________________
A BILL
To establish a process by which participants of employee welfare plans
select guidelines to be used by the plan fiduciary for voting proxies
on securities held in investment portfolios under the plan, and for
other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Encouraging More Proxy voting by
Organized Workers, Employees, and Retirement Savers Act'' or the
``EMPOWERS Act''.
SEC. 2. TRUSTEESHIP OF SINGLE-EMPLOYER PLANS.
Section 403(a) of the Employee Retirement Income Security Act of
1974 (29 U.S.C. 1103(a)) is amended--
(1) by redesignating paragraphs (1) and (2) as
subparagraphs (A) and (B), respectively;
(2) by striking ``Except as'' and inserting ``(1) Except
as''; and
(3) by adding at the end the following:
``(2)(A) The assets of a single-employer plan shall be held in
trust by a joint board of trustees, which shall consist of 2 or more
trustees representing on an equal basis the interests of the employer
or employers maintaining the plan and the interests of the participants
and their beneficiaries.
``(B)(i) Except as provided in clause (ii), in any case in which
the plan is maintained pursuant to one or more collective bargaining
agreements between one or more employee organizations and one or more
employers, the trustees representing the interests of the participants
and their beneficiaries shall be designated by such employee
organizations.
``(ii) In any case in which clause (i) does not apply with respect
to a single-employer plan because the plan is not described in clause
(i), the trustee or trustees representing the interests of the
participants and their beneficiaries shall consist of 1 or more
participants under the plan elected to serve as such in accordance with
this clause.
``(C) Not later than one year after the date of enactment of the
Encouraging More Proxy voting by Organized Workers, Employees, and
Retirement Savers Act, the Secretary shall issue rules with respect to
the election of trustees and certification of the results of such
elections under subparagraph (B)(ii). Such rules shall ensure that--
``(i) employee trustee elections are--
``(I) fair and democratic and free from
interference by the employer, the employer's
fiduciaries, and the investment managers;
``(II) designed to maximize participation by plan
participants and their beneficiaries and to be
convenient for participants, and their beneficiaries
when appropriate, to vote;
``(III) use the latest technologies to meet the
objectives described in subclause (II);
``(IV) provide for a secret ballot to be used by
the participants of the plan (or, in the case of a
deceased participant, by the beneficiary of such
participant); and
``(V) provide one vote per participant, which, in
the event a participant is deceased, may be cast by the
deceased participant's beneficiary; and
``(ii) trustee vacancies are filled--
``(I) by the election process, and not by
appointment; and
``(II) not later than one month after the trustee
position is vacant.''.
SEC. 3. PROXY VOTING GUIDELINES FOR SINGLE EMPLOYER PLANS.
(a) Establishment of Plan.--Section 402 of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1102) is amended by adding at
the end the following:
``(d) Proxy Voting Guidelines for Single Employer Plans.--
``(1) In general.--The trustees of a plan shall establish a
set of proxy voting guidelines to direct the voting of the
plan's shares of corporate stock by plan fiduciaries, except in
the case of an employee stock ownership plan as defined in
section 407(d)(6).
``(2) Trustees.--
``(A) Training.--Each plan trustee described in
paragraph (1) shall undergo training, which shall--
``(i) include education on proxy voting
issues, fund and executive compensation
practices, procedural prudence, and appropriate
long-term investing for retirement savers; and
``(ii) be administered by a third party
nonprofit organization with significant
experience in educating trustees for service as
employee representatives on employee benefit
boards.
``(B) Training curriculum.--The training described
in subparagraph (A) shall follow a curriculum
established by an entity selected by the Secretary.
``(C) Fiduciary duty to undergo training.--A
failure to undergo training and fulfill the obligation
to develop guidelines in accordance with paragraph (1)
shall be deemed to be a violation of fiduciary duties
under section 404.
``(3) Voting guidelines with respect to different
investment options.--A plan may establish multiple voting
guidelines, with each set of voting guidelines applicable to
specific fiduciaries and investment options available to the
plan participants.
``(4) Availability of voting guidelines.--The voting
guidelines established pursuant to this subsection with respect
to a plan shall be made available to all plan participants and
beneficiaries.
``(5) Investment companies and pooled investment
vehicles.--
``(A) Provision of voting guidelines.--If an
employee benefit plan is invested in securities issued
by an investment company registered under the
Investment Company Act of 1940 (15 U.S.C. 80a-1), or
any other pooled investment vehicle, the trustees
described in paragraph (1) shall provide to the company
the voting guidelines established under paragraph (1).
``(B) Proxy voting.--An investment company or
pooled investment vehicle described in subparagraph (A)
shall vote in accordance with the guidelines provided
under that subparagraph with respect to the percentage
of proxies that is equivalent to the percentage of
ownership of the employee benefit plan in the
investment company.
``(C) Proxy voting record report.--An investment
company described in subparagraph (A) shall annually
provide to the participant representation board a
report on all the votes the investment company cast on
behalf of the plan in the last year. Each such report
shall provide the relevant provision of the plan's
guidelines illustrating how the investment company made
its determination.
``(D) Rule of construction.--Nothing in this
paragraph may be construed to deem securities issued by
investment companies to employee benefit plans to be
senior securities, as defined in section 18(g) of the
Investment Company Act of 1940 (15 U.S.C. 80-18(g)).
``(6) Exemption for small plans.--The Secretary may exempt
from the requirements of this subsection any plan with fewer
than 100 participants, subject to the same requirements with
respect to an exemption to reporting requirements under section
2520.104-46 of title 29, Code of Federal Regulations (or any
successor regulations).
``(7) Conforming with secure act.--Not later than one year
after the enactment of this subsection, the Secretary shall
promulgate rules to ensure that the requirements of this
subsection apply to multiple employer plans with pooled
providers plans as described in section 413(e) of the Internal
Revenue Code of 1986.
``(8) Investment manager proxy voting policies.--No
investment manager shall require participating investors to
accept the investment manager's own proxy voting policy as a
condition of investment''.
(b) Prudence Requirement.--Section 404(a)(1) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1104(a)(1)) is
amended--
(1) in subparagraph (C), by striking ``and'' at the end;
(2) in subparagraph (D), by striking the period and
inserting ``; and''; and
(3) by adding at the end the following:
``(E) in exercising a plan's proxy voting rights with
respect to plan assets--
``(i) may vote proxies in accordance with the
plan's proxy voting guidelines as established by the
plan's trustees, unless the fiduciary determines that
the casting of any proxy vote would be inconsistent
with subparagraphs (A) and (B); and
``(ii) may consider--
``(I) the distinct and specific investment
objectives and horizons of the participants and
beneficiaries, especially in contrast with
other market actors engaged in proxy voting;
and
``(II) the diversified nature of the plan's
investments and the effect of any negative
externalities generated by portfolio companies
on the plan's ability to provide benefits to
participants and beneficiaries by reducing the
returns from other plan assets.''.
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