Under current law, employees must be able to direct the trustee as to the voting of shares allocated to their ESOP accounts on all issues in public companies and on limited issues in private companies.
Companies can voluntarily provide for additional voting rights.
In the recent ruling in Polaroid case, a court ruled that the trustee must make an independent decision for these undirected shares, even if the plan document directs the trustee to vote them according to the way allocated shares were voted. In the new ruling, the IRS says that trustees can in fact vote the undirected shares. With COLI, a company buys life insurance on a large percentage of its covered employees, using the build-up in value to help fund its repurchase obligation. The IRS is now looking into whether this tax advantage should be sustained. COLI has periodically come under congressional or IRS scrutiny, but, so far, has withstood challenges.