Encouraging More Proxy voting by Organized Workers, Employees, and Retirement Savers Act
Bill: S.1677 | Sponsor: Sen. Baldwin, Tammy (D-WI)
Policy area: Labor and Employment

Summary:
Encouraging More Proxy voting by Organized Workers, Employees, and Retirement Savers Act or the EMPOWERS Act
This bill modifies the requirements for single-employer retirement plans with respect to the fiduciaries and proxy voting procedures for such plans.
Specifically, it requires the assets of such plans to be held in trust by a joint board of trustees that represents the interests of the employer and the interests of the plan participants and their beneficiaries on an equal basis.
Additionally, the trustees of each plan must undergo training and establish proxy voting guidelines for the plan. In exercising a plan's proxy voting rights, a fiduciary may consider (1) the investment objectives of the plan participants and their beneficiaries, and (2) certain effects of negative externalities generated by portfolio companies.

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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