Fiduciary Committee Best Practices – Part 2: Preparing Meeting Minutes
In Part 1 of this two-part series we suggested that the key to compliance with the fiduciary requirements of ERISA can be boiled down to a simple proposition: follow a prudent process and document it. We used that proposition as a basis for offering five foundational steps that a fiduciary committee charged with overseeing the administration of an ERISA retirement plan should take, especially when the committee has responsibility for the investment of plan assets. One of those foundational steps involves the preparation of minutes of committee meetings. In this second part of the series we focus entirely on the preparation of meeting minutes. The goal is make sure your fiduciary committee gets the most mileage out of meeting minutes from a compliance standpoint and avoids stubbing its toe in the event that the minutes find their way into the hands of someone seeking to hang the committee by its own documentation.
Why keep minutes and who might see them someday? Meeting minutes are the most basic, and arguably the most important, form of documentation that a fiduciary committee can use to demonstrate the manner in which it has fulfilled its responsibilities under ERISA. Well drafted minutes allow a committee to keep track of what it has done and make it more likely that decisions over time will be made in a consistent and rational manner, but they do more than that. Even if a plan fiduciary follows a prudent process in making a given decision (e.g., the selection of an investment fund), the fiduciary will not have a very strong defense against a breach of fiduciary duty claim unless it can demonstrate that the process actually took place. Minutes document the process for both internal and external audiences.
There at least two potential external audiences for meeting minutes – the U.S. Department of Labor and attorneys representing plan participants who may have claims (i.e., potential plaintiffs). Every DOL investigation begins with a document request and every document request includes the minutes of trustee or fiduciary committee meetings that occurred during the period under investigation. If the employer can produce a well organized collection of minutes covering the period under examination, that sends the message that the employer is compliance-oriented and aware of fiduciary responsibilities. That message will help get the examination process off on the right footing. If the employer cannot produce minutes because no minutes have been taken, or if the minutes are spotty (or worse), that sends an entirely different kind of message about the employer's compliance habits. Attorneys representing potential plaintiffs may request meeting minutes (and subpoena them if they are not produced voluntarily) and will seek to strengthen their case based on what is and is not in the minutes. If a breach of fiduciary duty claim does arise, the success or failure of a defense against the claim may turn in large part on the availability and quality of meeting minutes.
Who should take the minutes (and when)? The best person to keep minutes is someone who is reasonably knowledgeable about the topics that regularly come up at meetings, familiar with the terminology and concepts that are likely to be used during discussions, will not himself/herself be called upon to make extensive presentations at meetings, and can attend meetings regularly. Given those considerations, the right person will not be a committee member. Possible candidates would include a senior human resources or finance staff member who meets the criteria, a consultant who works closely with the committee, or employee benefits legal counsel to the employer. No matter who takes the minutes, it's important for the minutes (or, more accurately, the notes that will be turned into minutes) to be taken contemporaneously, as the meeting occurs. Minutes prepared long after the meeting and based on recollections are valid but may be less accurate, and less compelling from an evidentiary standpoint, as a record of the proceedings.
Create a record (not a transcript). It is not necessary, and it is not even desirable, for the minutes to be a transcript of the meeting – replete with specific remarks attributed to specific people. Too often a particular remark or question captured in the minutes only creates undue concerns (or worse) in the eyes of someone (like a plaintiff's attorney) who was not at the meeting and looking to find fault. So the goal is to include enough detail to create a meaningful record without allowing the detail to overwhelm the larger themes discussed and important decisions made at the meeting. There's no magic formula for this, but minutes should at a minimum capture the following: (1) the date, time, and place of the meeting; (2) the committee members in attendance; (3) any invited guests, including consultants, legal counsel, and committee staff; (4) the matters discussed at the meeting; and (5) any decisions made or actions taken at the meeting. Also, importantly, the record of each meeting should include any written materials that were distributed or presented to the committee for discussion at the meeting. These might include issue summaries, slide decks, investment performance reports, and the like.
Approve and finalize the minutes. Meeting minutes should be approved by the committee within a reasonable period after the meeting to which the minutes relate. This will help ensure the accuracy of the minutes because the matters discussed will be relatively fresh in the minds of the members and it will avoid doubt regarding the validity of the minutes as a record. At a minimum, every meeting of a fiduciary committee should begin with the approval of the minutes of the prior meeting (which should be recorded in the minutes of the current meeting), unless the minutes were approved earlier.
Documentation of non-fiduciary activities. One final thought regarding a special challenge that arises where the members of a committee serve in both fiduciary and non-fiduciary capacities, which is not uncommon. If the meeting agenda includes matters that require the members to act in their capacities as senior executives or managers of the employers (e.g., a question regarding the design of a plan) as well as matters that are fiduciary in nature (e.g., a determination regarding the correct calculation of a plan benefit), consider holding two consecutive meetings and creating minutes only for the fiduciary portion. Alternatively, take notice of the different topics and different capacities of committee members in the minutes and attempt to distinguish the portions of the meeting. This will avoid the appearance of confusion regarding the roles being played by committee members.
A prudent process well documented in meeting minutes will promote sound fiduciary practices, facilitate consistent plan administration, and aide in the defense of fiduciary breach claims. It is well worth the time and effort to get this part of your fiduciary compliance effort right.