LaRue, Corporate Governance and the Next Pension Enron
In response to my query about Justice Roberts and his comment about a plan's SPD, ERISA attorney Stephen Rosenberg wrote "Susan Mangiero was taken by the discussion in the oral argument of what powers may or may not have been identified in the summary plan description appended to LaRue’s complaint. I took this discussion by the Justices to be part of an inquiry into what are the constraining parameters of a claim such as the one brought by LaRue." Go to Boston ERISA & Insurance Litigation Blog for additional discussion.
The Wall Street Journal's Law Blog had an interesting post on LaRue. (I included the link a few days ago and am including it here again.) Several folks commented in response, including this blog's author. See below for my response (with a bit of editing).
<< I concur with the Nov. 27 post by the ERISA Consultant. Pension governance is serious business for millions of individuals who are impacted by the decisions made by plan fiduciaries. Hopefully, the LaRue case (regardless of outcome) will prompt a vigorous debate about fiduciary issues - who has responsibilities for what tasks and how retirees are impacted if breach occurs. Shareholders should be paying attention to LaRue as well. Poor governance of retirement plans can have a material adverse impact on earnings. >>
As I have said many times and will no doubt say many more times, pension governance (broadly defined as best practices, applied to all retirement plan types) is an integral part of corporate governance. While this message is gaining currency, most experts in the fiduciary space assert that there is vast room for improvement. If you agree (and not everyone does), a critical question comes to mind.
What will it take for pension governance to be viewed as equally important as mainstream corporate governance issues such as (a) proxy voting (b) executive compensation (c) financial statement certification (d) internal controls and (e) agency conflicts between managers and shareholders?
Negative headlines about Enron and other troubled companies forced shareholders and lawmakers to pay attention. Do we need a pension meltdown a la Enron to force change in the retirement industry?
We would love to get your feedback on what you think will force pension governance to quickly climb the "high priority" list for organizations not already concentrating on such. Click here to drop us a line.
