HomeMy WebLinkAboutAgenda Police Pension 013113 Agenda
City of Palm Beach Gardens Police Officers’
Pension Fund
MEETING OF JANUARY 31, 2013
LOCATION: City Council Chambers’
10500 North Military Trail
Palm Beach Gardens, FL 33410
TIME: 9 AM
1. Call Meeting To Order
2. Roll Call:
• Jay Spencer, Chairman
• David Pierson, Secretary
• Brad Seidensticker, Trustee
• Greg Mull, Trustee
• Marc Glass, Trustee
3. Class Action Report–Kessler, Topaz, Meltzer & Check: KTMC (Jonathan Davidson)
• 12/31/2012 Quarterly Report
• 2012 Claims Summary Report
• KTMC & Salem Trust Authority Letters
4. Presentation of the 9/30/2012 Audited Financial Statements – Cherry, Bekaert &
Holland: CBH (Jim Burdick)
5. Investment Manager Report – RhumbLine Advisors (Denise D’Entremont)
6. Investment Manager Report – ICC Capital (Steve Stack)
7. Investment Consultant Report – Thistle Asset Consulting (John McCann)
8. Attorney Report – Law Offices of Perry & Jensen (Bonni Jensen)
• Discussion Regarding City’s Request to use the Plan’s Actuarial Data from
GRS
9. Administrator Report – Resource Centers (Audrey Ross)
• Revise 2013 Meeting Dates (April & July)
• Discussion Regarding Plans Local Checking Account (BB&T)
10. Approval of Minutes
• November 28, 2012 Special Meeting
11. Disbursements
12. Benefit Approvals
13. Financial Statements
14. Other Business
• Review of Current DROP Account Policy
• Update on GRS Analysis Regarding the Chapter 185 Monies
15. Public Comments
16. Adjourn
Next Meeting Date:
To be Determined
PLEASE NOTE:
Should any interested party seek to appeal any decision of this Board with respect to any matter considered at such
meeting or hearing, s/he will need a record of the proceedings and for such purpose may need to ensure that a verbatim
record of the proceedings is made, which record includes the testimony and evidence upon which the appeal is to be
based.
In accordance with the Americans With Disabilities Act of 1990, persons needing a special accommodation to participate
in this meeting should contact the The Pension Resource Center, LLC no later than four days prior to the meeting.
Quarterly Securities Litigation Update for
CITY OF PALM BEACH GARDENS POLICE OFFICERS' PENSION
FUND
Quarter Ending December 31, 2012
MARKET OVERVIEW Quarterly Report
Dow Jones Industrial 13,437.1 13,104.1
S & P 500 1,440.7 1,426.2
NASDAQ 3,116.2 3,019.5
PRICE CHANGE
Close at 12/31/2012Close at 9/28/2012
-2.5%
% Change
-1.0%
-3.1%
2
MARKET OVERVIEW Quarterly Report
The fourth quarter of 2012 resulted in slight declines for the three major U.S. indices. As
depicted in the chart and graph above, the Dow dropped 2.5%, the S&P 500 lost 1%, and the
NASDAQ fell 3.1%. Political events and natural disaster were huge factors in the fourth
quarter’s losses. In the month of October, Hurricane Sandy struck the Northeast coast of the
U.S., closing the New York Stock Exchange for two straight days, which caused some
uncertainty for investors. New York experienced a decline in payrolls of 33,500; New Jersey
was down 8,100 jobs due to the destruction from Sandy. More impactful was the looming
“fiscal cliff” in the United States. During and after the presidential election, growing concern
over the market impact of the upcoming fiscal cliff created much uncertainty in the corporate
and investor communities. With an uncertain agreement on tax increases and spending cuts,
consumer investments and spending habits languished as well. The losses experienced
throughout the quarter were somewhat mitigated by a small, intermittent, Santa Claus Rally in
the markets over the last week of 2012, and the closing day of 2012 proved optimistic as
investors became more confident in the prospect for an agreement to avert the Fiscal Cliff. The
Dow Jones jumped 166 basis points, gaining 1.3%, closing with a 7.3% gain for 2012. The
S&P 500 rose 1.7%, closing with a 13.4% gain year-over-year. The NASDAQ also experienced
gains at the last day of trading, with an increase of 2%, which resulted in a 15.9% gain for 2012.
Overall, despite slight losses for the fourth quarter as a whole, the last day of trading
experienced gains resulting in a 7%-16% increase for all three major U.S. indices for the year.
Unlike the U.S. markets, European stocks overall saw gains at the end of their fourth
quarter 2012. Despite factors including the United States’ fiscal cliff predicament and Europe’s
on-going financial crisis, Germany’s DAX Index saw a 29.1% increase in 2012. The Stoxx
Europe 600 ended the fourth quarter with a 4.2% increase and ended the year with a 14% gain.
The auto-industry influenced the Stoxx 600’s 14% increase, which was its biggest yearly gain
since 2009. The FTSE 100 Index rose 2.7% for the fourth quarter and closed the year with a
5.8% gain. Due to financial ministers in Greece allowing for easement of terms on their
nation’s loans, the ASE Index increased 23% for the fourth quarter, ending the year with a 33%
gain. France’s CAC 40 also ended the year on a high note, gaining 15% for 2012.
3
SETTLED LITIGATION Quarterly Report
The following is an update of the portfolio monitoring services provided by Kessler Topaz
Meltzer & Check, LLP ("Kessler Topaz") for City of Palm Beach Gardens Police Officers'
Pension Fund ("Palm Beach Gardens"). The cases listed below include both settled and
ongoing securities class actions in which Palm Beach Gardens had transactions during the
relevant class period. If you have any questions regarding this report please contact Darren J.
Check, Esq. at (610) 822-2235 or dcheck@ktmc.com.
SETTLED LITIGATION
Kessler Topaz is responsible for submitting proof of claim forms on behalf of Palm Beach
Gardens. Kessler Topaz has reviewed Palm Beach Gardens' transaction history for relevant
transactions and has submitted proof of claim forms for the following class action settlements:
CLAIMS
DEADLINE
CLASS
PERIODSETTLEMENT TOTAL
SETTLEMENT
Medtronic, Inc. (2008)12/11/2012 11/20/06 - 11/17/08 $85,000,000
4
SETTLED LITIGATION Quarterly Report
Based on a review of Palm Beach Gardens' transaction history, Kessler Topaz has determined
that Palm Beach Gardens did not purchase shares during the relevant Class Period and was
not eligible to file claims for the following class action settlements:
CLAIMS
DEADLINE
CLASS
PERIODSETTLEMENT TOTAL
SETTLEMENT
BancorpSouth, Inc.11/20/2012 4/23/09 - 7/22/10 $29,250,000
Bear Stearns Companies, Inc.10/25/2012 12/14/06 - 3/14/08 $294,900,000
Broadcom Corp. (2006) (Ernst &
Young)
12/26/2012 2/14/06 - 5/25/06 $13,000,000
Countrywide Financial Corp.
(SEC)
12/9/2012 3/01/05 - 4/24/08 $48,150,000
E*TRADE Financial Corp. (2007)10/31/2012 4/19/06 - 11/9/07 $79,000,000
El Paso Corporation (2011)12/27/2012 8/30/11 - 5/25/12 $110,000,000
Evergreen Ultra Short
Opportunities Fund
11/21/2012 10/28/05 - 6/18/08 $25,000,000
Goldman Sachs MBS 12/18/2012 3/30/06 - 2/6/09 $26,612,500
IMAX Corp.10/12/2012 2/27/03 - 7/20/07 $12,000,000
IndyMac Bancorp, Inc. (2007)12/28/2012 3/01/06 - 3/1/07 $5,500,000
Matrixx Initiatives, Inc. (2004)11/13/2012 10/22/03 - 2/6/04 $4,500,000
NextWave Wireless Inc. (2011)12/10/2012 11/14/06 - 8/7/08 $1,400,000
Pall Corporation 12/13/2012 4/20/07 - 8/2/07 $22,500,000
Thornburg Mortgage, Inc. (2007)11/19/2012 4/19/07 - 3/19/08 $2,000,000
Zynex, Inc.10/1/2012 5/21/08 - 3/31/09 $2,500,000
5
UPDATES FOR ONGOING U.S. LITIGATION Quarterly Report
The following list of ongoing litigation contains current updates for the quarter ended
December 31, 2012. Please note, if there has been no new activity for this litigation during
the quarter, the most recent status update is listed. Recently settled and dismissed cases are
included in this section.
Medtronic, Inc. (2008)-The Court granted final settlement approval on November 8, 2012.
Walter Energy, Inc.-Defendants filed a motion to dismiss the amended complaint on
October 4, 2012.
6
SECURITIES LITIGATION SETTLEMENTS
The chart on the following page is a summary of Securities Class Action claims that have been paid from
December 1, 2011 through December 21, 2012. Also included are a list of claims that are pending payment
and a list of claims that the claims administrator has determined are ineligible for recovery. Please feel free
to contact us if you have any questions or concerns regarding this information.
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Minutes 11-28-12.doc
Page 1 of 6
City of Palm Beach Gardens Police Officers’
Pension Fund
Minutes of the Meeting Held
November 28, 2012
The regular meeting of the Board of Trustees of the City of Palm Beach Gardens
Police Officers’ Pension Fund was called to order at 9:01 AM by Jay Spencer in the
Council Chambers at the Palm Beach Gardens City Hall at 10500 North Military Trail,
Palm Beach Gardens, Florida.
TRUSTEES PRESENT OTHERS PRESENT
Jay Spencer, Chairman Audrey Ross (Resource Centers)
David Pierson, Secretary Bonni Jensen (Law Offices of Perry & Jensen)
Brad Seidensticker, Trustee Donna Kramer (PBG Clerk’s Office)
Greg Mull, Trustee Steve Stack (ICC Capital Management)
Marc Glass, Trustee John McCann (Thistle Asset Consulting)
Steve Palmquist (GRS)
Pete Strong (GRS)
ACTUARY REPORT
GRS – Presented by Steve Palmquist & Pete Strong
Mr. Palmquist explained that he was here today to personally address the board
regarding a letter that they recently received regarding his upcoming retirement;
January 1, 2013. Mr. Spencer wanted to first thank Mr. Palmquist for all the great
services that he has provided to the board over the many years. He noted that Mr.
Palmquist has been involved with the building of this Plan since the beginning and he
has been a true asset.
Mr. Palmquist introduced Mr. Strong to the board and stated that Mr. Strong will be
taking over for him. Mr. Strong welcomed himself and commented that he has been
working closely with Mr. Palmquist for the last 5 years in preparation of his upcoming
retirement. Mr. Palmquist explained that his team of Actuaries behind the scenes
will still remain in place, and there will always still be 2 senior Actuaries and 1 senior
Analysis working on every project. The board wished Mr. Palmquist luck in his
retirement.
INVESTMENT MANAGER REPORT
ICC Capital Management – Presented by Steve Stack
Mr. Stack wanted to address the inquire of ICC with Munder. He explained that ICC
has signed a letter of intent with the company Munder out of Michigan. In return
Munder has sent a care package to ICC and they are currently working on gathering
all the information needed. Mr. Stack stated that after that process has been
completed, then ICC will either enter into a final agreement with Munder or they
won’t. He noted that he does not have an exact timeline to the transition at the
moment if it does happen, although the probability of the transition happening is
about 75% at this time. Mr. Stack explained that Munder will retain ICC’s employees
and that they also offer a lot more opportunity to ICC investment wise. He
reassured that board that if the transition did go through, that there would be no
changes to this Plan’s portfolio, portfolio team, fees, etc. Mr. Stack noted that he
will update the board as more information becomes available.
Minutes 11-28-12.doc
Page 2 of 6
Mr. Stack updated the board on another firm/client related item. He stated that ICC
has had their second largest client leave them last quarter due to changes the client
made to their plan. He noted that ICC is trying to get back with them because they
were a client of theirs since 1995. This plan will not be impacted because the client
that left was in a separate portfolio.
Mr. Stack reviewed the September 30, 2012 fixed income report and commend that
they ended the quarter with $16,118,391 in assets. The total fund outperformed the
index net of fees for the quarter at 1.70% versus 1.59%, but for the fiscal year the
fund was behind net of fees at 4.93% versus the index at 5.16%.
On the equity side the fund was behind for the quarter and fiscal year at 4.91%
versus 6.11% and 24.64% versus 29.19%, respectively. Mr. Stack explained that
their underperformance was mainly to do with one stock, Apple. Apple had the
biggest holding in the market during the quarter at 9%, and ICC only had a 1%
holding in them. He stated that they missed out then, but since the quarter Apple
has sold off and ICC has benefited from that with a gain of 300 basis points. Lastly
he commented that they are currently trying to find a way to reserve the capital
because of the issues overseas.
INVESTMENT CONSULTANT REPORT
Thistle Asset Consulting – Presented by John McCann
Mr. McCann reviewed the Plans investment style as of the end of the fiscal year.
Overall he commented that the portfolio is nicely diversified between large and mid
cap companies and well as International.
Mr. McCann noted that the plan had a great fiscal year ending September 30, 2012
with a total net return of 18.63% versus the index at 19.60%. The plans assumed
rate of return of 7.75% was beat for this fiscal year, and we will also be dropping off
a very bad year from 2008 at the end of this fiscal year which will be very beneficial
to the fund. Mr. McCann reviewed each manager’s performance during the quarter
and the fiscal year. He noted that Apple was held in 3 different funds within the
equity portfolio and RhumbLine’s 3 accounts were all in line with the index for the
quarter and fiscal year. Mr. McCann commented that American Realty had another
capital call on 10/1/2012, which is not reflected in this report. With the recent
funding American Realty is now up to $1M and Mr. McCann stated that he would like
the board to consider allocating more to them from the ICC’s fixed income account.
He reminded the board that we are taking the yield from American Realty every
quarter and using it for benefit payments instead of reinvesting them. Mr. McCann
reviewed the plans asset allocation and commented that he would recommend
moving $1.5M from the ICC fixed income account to the American Realty account.
This would now move the American Realty allocation up to 5% ($2.5M) of the
portfolio. He noted that if the board did decide to do this, then they would also need
to amend their investment policy guidelines to increase the allocation target to
American Realty. The board had a lengthy discussion on the transfer that was being
recommended.
MOTION: Mr. Pierson made a motion to authorize the transfer of $1.5M
from the ICC fixed income account to the American Realty
account per the Investment Consultants recommendation.
SECOND: Mr. Seidensticker seconded the motion.
CARRIED: The motion carried unanimously 5-0.
Minutes 11-28-12.doc
Page 3 of 6
MOTION: Mr. Seidensticker made a motion to amend the investment
policy guidelines to increase the allocation target to American
Realty to 5%, and to also approve the Chair to execute the
revised investment policy guidelines in between meetings.
SECOND: Mr. Pierson seconded the motion.
CARRIED: The motion carried unanimously 5-0.
Mr. McCann discussed with the board some other investment ideas and
opportunities. He recommended adding more into real estate, repositioning the
International and RhumbLine accounts. The board had a lengthy discussion on the
different ideas and asked Mr. McCann to put together an asset allocation and bring it
back to the next meeting. The Trustees also discussed gold, commodities, and
ETF’s. Mr. McCann stated that if the board was looking into something of that
nature, then they would need to purchase either ADR’s or ETF’s because not a lot of
companies trade domestically with gold or commodities. He noted that he will also
bring back some more information regarding this as well.
ATTORNEY REPORT
Law Offices of Perry & Jensen - Presented by Bonni Jensen
Ms. Jensen explained that the Plan received a letter from the Division of Retirement
regarding the recent Ordinance changes that were passed, which lowers the plans
benefits. This letter is known as the “Naples Letter”. Ms. Jensen reviewed the letter
with the board and explained the Division of Retirement’s new interpretation of the
Chapter 185 monies (in which they are now changing their interpretation after many
years). The Division now wants the Trustees to determine if their 185 monies meet
the minimum requirements that were in place as of 1999. Ms. Jensen explained that
in order for this to be determined, GRS would need to do the actuarial analysis.
MOTION: Mr. Seidensticker made a motion to authorize and approve GRS
to prepare a calculations/analysis in accordance to the letter
the Plan received from the Division of Retirement regarding the
minimum Chapter 185 benefits since 1999.
SECOND: Mr. Glass seconded the motion.
CARRIED: The motion carried unanimously 5-0.
Ms. Jensen reviewed some of the benefit changes that were recently passed and the
effect it will have on some members. For example, now the DROP eligibility is
according to years of service and not age like before. Therefore if a member is not
hired by the City before they are 29 years of age, then they will never be eligible to
enter the DROP because they will be pass that 30 year max of service that is allowed
under the DROP provision. The new retirement eligibility states that members must
be age 59 to retire and most people in the work force now will have over 30 years of
employment by age 59. The DROP clause stated that members are not eligible to
enter the DROP past their 30th year of employment. Mr. Mull stated that the revised
contract started effective September 13, 2012 and is only in place for 1 year;
therefore they can address this issue during the next contract in 2013. Lastly Ms.
Jensen also stated that once GRS completes the analysis and if the minimum
benefits are met then the plan will stay as is. But if the analysis reflects that there is
additional money left over after the minimum benefits from 1999 have been met,
then that money can be used to buy down the age 59 requirement back to age 52
with 25 years of service (back to what the normal retirement eligibility has always
Minutes 11-28-12.doc
Page 4 of 6
been prior to the recent changes). We will find out more after the analysis is
complete.
Ms. Jensen commented that she was contacted by the plan’s securities monitor;
Kessler, Topaz, Meltzer & Check (KTMC). KTMC stated that they will file all class
action filings for free on behalf of the board. Ms. Jensen noted that Salem Trust also
currently offers this service for free as well. Although in September Salem Trust sent
out a letter to all their Plan’s stating that they were going to start charging for their
class action monitoring services. Salem Trust ended up retracting back their original
letter fairly quickly because it is already in their contract that they would provide this
service as no additional cost. Since then Salem Trust has stated that they may
approach their clients in the near future to revise their contracts to either remove the
class action servicing part all together, or they will start charging for the service.
The Board discussed what Salem Trust provides as well as KTMC, and asked Ms.
Jensen to invite KTMC to their next meeting as they would like to hear from them
regarding their class action filing process. Ms. Jensen noted that she will invite KTMC
to the January 31, 2013 meeting.
Ms. Jensen presented that board with the revised PRC fee addendum to be executed.
She commented that the board previously approved a monthly fee retainer increase
from $2,275 to $2,575 per month effective September 1, 2012.
Ms. Jensen noted that she is assisting former Trustee Wayne Sidey with his appeal
because when he left the board he never received his Form 1 Disclosure due to the
fact that he moved out of the State. Therefore he missed the deadline to file and he
was hit with a fee in which they are in the process of appealing.
ADMINISTRATOR REPORT
Resource Centers – Presented by Audrey Ross
Ms. Ross started that recently an active member passed away and she needs the
boards help in determining who will be the beneficiary of his death benefit. This
member did not have a beneficiary form on file and he was partially vested in the
Plan with 8 years and 9 months of service. It was also noted that the member was
not married at the time of his death, although he did have a dependant child. The
Board disused the situation and Ms. Jensen reviewed the Plan’s language with the
board and noted that in this case since the member did not have a beneficiary form
on file, the board can make the discretion as to where the payment can go. Ms.
Jensen noted that her recommendation would be to pay the members estate since
there is no surviving spouse, and also his child cannot receive a benefit at this time
or at any other time in the future either. She explained that the child would not be
able to start collecting the benefit until the members early or normal retirement date
is reached, and in this case the child will already be over the age of 18 by that time
and would no longer be entitled to the benefit. The Trustees’ has a lengthy
discussion on the different options.
MOTION: Mr. Seidensticker made a motion to pay out the non-duty death
benefit to the Estate of Mr. Thomas Juric.
SECOND: Mr. Pierson seconded the motion.
CARRIED: The motion carried unanimously 5-0.
Ms. Ross noted that she will send the necessary information over to GRS so they can
calculate his lump sum benefit that will be paid to his Estate.
Ms. Ross presented the board with the 2013 meeting dates.
Minutes 11-28-12.doc
Page 5 of 6
MINUTES
MOTION: Mr. Seidensticker made a motion to approve the minutes from
the August 9, 2012 regular meeting.
SECOND: Mr. Pierson seconded the motion.
CARRIED: The motion carried unanimously 5-0.
DISBURSEMENTS APPROVALS
MOTION: Mr. Pierson made a motion to approve the disbursements.
SECOND: Mr. Seidensticker seconded the motion.
CARRIED: The motion carried unanimously 5-0.
BENEFIT APPROVALS
MOTION: Mr. Mull made a motion to approve the applications to enter the
DROP for Andrew Spragg, Christopher Barca, Gary Carmack,
Jack Schnur, Jeffrey Main, Ralph Kranchick, and Robert
Christoffers.
SECOND: Mr. Glass seconded the motion.
CARRIED: The motion carried unanimously 5-0.
MOTION: Mr. Seidensticker made a motion to approve the application for
distribution of DROP account (2/15/2013) for Jay Spencer.
SECOND: Mr. Glass seconded the motion.
CARRIED: The motion carried unanimously 4-0.
*Jay Spencer sustained from the vote* *Form 8B on file*
OTHER BUSINESS
Ms. Ross presented the board with the September 30, 2012 Audit Engagement Letter
from Cherry, Bekaert & Holland. She noted that CBH is increasing their fee this year
from $14,500 to $14,850 after 4 years.
MOTION: Mr. Seidensticker made a motion to approve September 30,
2012 Audit Engagement Letter, including the fee increase to
$14,580.
SECOND: Mr. Pierson seconded the motion.
CARRIED: The motion carried unanimously 5-0.
Ms. Ross presented the board with the 2013 Fiduciary Liability Insurance Renewal.
She commented that the renewal fee this year is $5,572, which is $322.30 lower
than last year.
Minutes 11-28-12.doc
Page 6 of 6
MOTION: Mr. Seidensticker made a motion to bind coverage for the 2013
Fiduciary Liability Insurance.
SECOND: Mr. Mull seconded the motion.
CARRIED: The motion carried unanimously 5-0.
Ms. Ross presented the board with the September 30, 2012 Salem Trust class action
report. She noted that there were no class actions filed or there were settlements
received in on behalf of the plan during the quarter.
PUBLIC COMMENTS
N/A
AJOURN
There being no further business, and the future meetings are scheduled for the 3rd
Thursday of the first month proceeding the quarter. The next regular meeting was
scheduled for Thursday January 31, 2013 at 9AM; the Trustees officially adjourned
the meeting at 11:22AM.
Respectfully submitted,
_____________________________
DAVID PIERSON, Secretary