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The ESOP Committee Guide
by Jim Bado, Stephen Clifford, Dave Fitz-Gerald, Brian A. Inniger, Camille Kerr, Kellee Kroll, Linshuang Lu, Christopher Mackin, Liz McKeever, Alexander Moss, Tracey Myers, The Phelps County Bank ESOP Committee, Loren Rodgers, Corey Rosen, Virginia Vanderslice, and Jack Veale
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Format: Perfect-bound book, 156 pages
Edition: Third edition (December 2011)
Status: In stock
Part 1: The Roles of ESOP Committees
1. ESOP Committees: An Overview
2. Duties of ESOP Administrative Committees
3. Activities of ESOP Communications Committees
Part 2: Best Practices
4. Developing an Effective ESOP Communications Committee
5. Leadership and ESOP Committees
6. ESOP Committees: Stages of Development
7. The Top Nine Mistakes ESOP Committees Make (and How to Avoid Them)
Part 3: Case Studies
8. Inside the BL Companies ESOP Committee
9. Five Case Studies
From Chapter 1, "ESOP Committees: An Overview"An ESOP administrative committee focuses on the operation of the plan and on the management of plan assets. This type of committee may or may not be a named fiduciary in the ESOP plan, depending on its range of responsibilities and authority, and it may have only advisory power and no formal authority to make decisions regarding the ESOP. While some administrative committees are not named fiduciaries, they may still intentionally or unintentionally act as fiduciaries depending on the types of decisions they make and actions they take. All committees involved with any aspect of managing or decision-making regarding ESOP plan assets should regularly consult legal counsel to understand their range of duties and to avoid unintentional legal liability.
ERISA requires that ESOPs must have trustees, but ESOP companies are not required to have ESOP fiduciary or administrative committees. Many ESOP plan documents refer to an "ESOP Committee." In most cases this refers to the committee with specific ESOP fiduciary and/or administrative functions, not the broader communications functions. Many ESOP companies do not want their less formal ESOP committees to make fiduciary decisions or manage plan assets. The essential point is that an ESOP fiduciary and administrative committee often serves in a formal legal capacity, and the responsibilities (and risks) borne by the committee are regulated under ERISA.
It is critical not to confuse this type of ESOP committee with the other types, which advise company leadership (rather than advising the ESOP trustees) on various company issues (rather than ESOP trust issues) and which generally are not fiduciaries and do not face the same level of regulatory scrutiny and risk. Issues facing ESOP fiduciaries, including fiduciary committees, are addressed in many other venues in the ESOP community. While these issues are not the main focus of the remainder of this chapter, we will identify some of the distinctions as we discuss issues addressed by other kinds of ESOP committees.