1. William E. Ryan III Managing Director & Chief Fiduciary Officer Evercore Trust Company, N. A. Norman P. Goldberg Vice Chairman Evercore Trust Company, N. A. The Evolving Role of the Independent Fiduciary in Pension De-Risking Transactions

2. What Is An “Independent Fiduciary”? Originally proposed in plan litigation and prohibited transaction exemptions. Usually “RIAs” (investment advisers registered under the Investment Advisers Act) or institutional trust companies (especially where the independent fiduciary is serving as an ongoing manager of plan assets). Under existing Department of Labor (“DOL”) guidance, independent fiduciaries in exemptions or settlements must have: Expertise and Training: The fiduciary must have “appropriate training” not only with respect to evaluating the transaction, but also evaluating the transaction “in accordance with the fiduciary duties and responsibilities prescribed by ERISA.” Independence: The fiduciary must be “independent of and unrelated to any party in interest engaging in the exemption transaction and its affiliates” - a “facts and circumstances”/revenue driven analysis. Roles of Independent Fiduciaries in De-Risking Non-Discretionary: Fiduciary in recommending the purchase of particular annuity contract; sponsor chooses. Discretionary: Fiduciary makes the investment decision to purchase the annuity. “Co-Fiduciary”: Independent fiduciary has “override” authority over plan sponsor decision. 2

3. Why Should a Plan Sponsor Consider Hiring an Independent Fiduciary in Annuity Transaction? Conflicts of Interest/Keeping the “Two Hats” (Settlor Role vs. Fiduciary Selection of Annuity) Separate: –OK for sponsor to consider financial/other benefits to the plan sponsor if part of settlor decision to take action to modify plan benefits, terminate a plan, or annuitize benefits through an insurance company (e.g. considering impact on enterprise value). –NOT OK for sponsor to have these financial/other benefits affect how the decision to de-risk is implemented. 1980s – DB plan sponsor’s interest in purchasing the least expensive annuity/maximizing the dollar value of potential reversions of “excess assets” compromised the sponsor’s fiduciary judgment. (Executive Life) Especially in large/complicated transactions (e.g., GM, Verizon), with high legal/related risk, independent fiduciaries can provide certain advantages, including: Expertise in fiduciary decision-making process (e.g. creating the fiduciary review and record), removing the burden and potential conflicts from in-house fiduciaries and creating a favorable record. Broad prohibited transaction relief in annuity transactions (e.g. QPAM exemption) Minimizes allegations of conflicts of interest/litigation defense for sponsor by having unaffiliated independent party recommend or actually make the annuity purchase decision 3

4. “ Best Practices” for Independent Fiduciaries Selecting or Recommending Annuities Develop and Document the Process: Structure/follow a written/comprehensive review process/project plan of the annuity decision (e.g. selection of advisers, review of plan documents, preparation/review of insurance RFP, develop financial/administrative criteria for judging safety/solvency of carrier) Comparability Analysis of Insurer/Annuity Contracts: Process/written evaluation includes: Insurer Evaluation: Comprehensive financial analyses of the insurance companies (ratings, financial reports, audit findings (to the degree available)) plus review of the insurance company regulatory structure – the state regulation/other regulators (e.g., the Federal Reserve) Structure of Annuity Contract: (e.g. availability of separate accounts, reinsurance protection) Insurer’s Administrative Processes/Communications Materials/Complaints: Evaluation of the insurance company complaint files relating to claims processing, accuracy and timeliness of responses. What are participant protections in the event of (a) bad data, (b) errors in benefit calculations State Guaranty Fund v. PBGC Syndication: Insurer’s experience in working as part of a syndicate of insurers, and their capability for serving as (a) a syndicate administrator for payments among the carriers and (b) proposals on how to syndicate benefits Cost: Can it be considered and, if so, how? 4

5. New Challenges for Independent Fiduciaries to Consider in De-Risking Scenarios The Issue of “Annuity Capacity” Post GM and Verizon Syndication Pros and Cons (Lee v. Verizon) The Use of Annuities to De-Risk Outside of a Plan Termination - Litigation and Potential Regulatory Review Lee v. Verizon claims - (a) the annuitization of plan benefits outside of a plan termination violated ERISA unless the plan or SPD specifically disclose the ability of the sponsor to annuitize benefits through the purchase of an annuity contract, and (b) that the use of the annuity could be seen as an effort to deprive participants of protections offered by the PBGC insurance program. PBGC’s 2009-2010 Proposed Regulatory review arguing that annuitization outside of the plan termination context could be seen as an abuse of ERISA. Are There Other Alternatives On the Horizon?: Other possible alternatives to traditional annuitizations (e.g. captive insurance companies, synthetic GIC/BICs)? 5