8.
Fiduciary Review Process
– Reliance on Valuation Report
–
The Trustee must document
and understand the valuation
report with regards to the
consistency of the report and
its conclusions, assumptions and
analyses. The Trustee must
document the individuals
who participated in the
proposed transaction, who and
why certain individuals disagreed
with the transaction, and
whether the disagreement
occurred before the Trustee
approved the transaction.
9.
Preservation of Documents –
The Trustee must preserve for six
years all notes and records that
document any transactions that
are completed in relation to the ESOP.
10.
Fair Market Value –
The Trustee
must prevent the ESOP from
purchasing employer securities
for more than fair market value
or sell employer securities for
less than fair market value.
Also, the principal amount of
debt financing the transaction
cannot exceed the fair market
value of the stock acquired with
that debt.
11.
Consideration of Claw-Back –
The Trustee must consider
whether it makes sense to
request a claw-back arrangement
or other purchase price
adjustment(s) to protect the
ESOP against the possibility of
adverse consequences in the
event of significant corporate
events or changed circumstances.
12.
Other Professionals –
The
Trustee may use other
professionals to carry out its
fiduciary duties under ERISA as
long as it is prudent to do so.
The areas covered by these guidelines
do not necessarily represent all of
the obligations that a Trustee needs
to adhere and do not supersede
any existing regulations. However,
the GreatBanc case highlights areas
the DOL will examine in an ESOP
investigation and best practices
Trustees should follow.
5
| Valuation Vantage
Fall-Winter 2014
“
Implications of GreatBanc Trust’s Settlement...
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continued
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