Employee Stock Ownership Plans (ESOPs) Archives - Page 3 of 15

Employee Rewards in M&A Transactions: Comparability Provisions

by McDermott Will & Emery | Mar 9, 2021 | Employee Benefits, Employee Stock Ownership Plans (ESOPs), Employment, Executive Compensation, Privacy and Data Security, Retirement Plans

Companies enter into merger & acquisition (M&A) deals for a range of reasons, but how employees are treated once a deal closes depends largely on the buyer’s deal strategy. Often the buyer signs a deal under the promise that the acquired business’ employees will continue to receive rewards at deal close that are comparable to those they received before, at least for a specified period of time. But why include such comparability provisions in deal terms given that they appear to restrict the buyer? What do these provisions typically cover? And what are best practices?

Willis Tower Watson recently tapped law firms with leading M&A advisory teams, including McDermott’s Carole Spink, to dig into the answers.

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Final Rule for Selecting Retirement Plan Investments Leaves “ESG” Behind

by Brian Tiemann and McDermott Will & Emery | Dec 17, 2020 | Employee Benefits, Employee Stock Ownership Plans (ESOPs), Fiduciary and Investment Issues, Retirement Plans

In recent guidance, the Department of Labor clarified the retirement plan standards for environmental, social and corporate governance (ESG) investing without mentioning the term ESG. The new guidance provides that, when selecting and monitoring plan investments, an Employee Retirement Income Security Act (ERISA) fiduciary must never sacrifice investment returns, take on additional investment risk or pay higher fees to promote non-pecuniary benefits or goals.

Teal Trujillo, an incoming associate in our Chicago office, also contributed to this On the Subject.

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Securing Retirement: Additional SECURE Act and Miners Act Guidance for Retirement Plans

by Jeffrey Holdvogt and Diane Morgenthaler | Dec 9, 2020 | Employee Benefits, Employee Stock Ownership Plans (ESOPs), Employment, Executive Compensation, Retirement Plans

The Internal Revenue Service (IRS) recently issued practical and helpful guidance in a question-and-answer format for tax-qualified retirement plans and for an Individual Retirement Arrangement (IRA), regarding the legislative changes under the Setting Every Community Up for Retirement Enhancement Act of 2019 (the “SECURE Act”) and the Bipartisan American Miners Act of 2019 (the “Miners Act”).

Teal Trujillo, an incoming associate in our Chicago office, also contributed to this On the Subject.

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IRS Announces 2021 Employee Benefit Plan Limits

by Jeffrey Holdvogt, Jacob Mattinson and Brian Tiemann | Oct 28, 2020 | Employee Benefits, Employee Stock Ownership Plans (ESOPs), Health and Welfare Plans, Retirement Plans

The Internal Revenue Service (IRS) recently announced the cost-of-living adjustments to the applicable dollar limits for various employer-sponsored retirement and welfare plans for 2021. Nearly all of the dollar limits currently in effect for 2020 will remain the same, with only a few amounts experiencing minor increases for 2021.

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ESOP Litigants Play by Their Own Valuation Rules

by Richard J. Pearl | Aug 27, 2020 | Benefit Controversies, Digital Health, Employee Benefits, Employee Stock Ownership Plans (ESOPs), Fiduciary and Investment Issues, Retirement Plans

Imagine if you were playing on a baseball team and the opposing players argue that you are violating the rules of soccer. That’s what it’s like when private parties and the Department of Labor (DOL) challenge Employee Stock Ownership Plan (ESOP) valuations. Plaintiffs play a very different valuation ballgame, which confounds experts who go up against them in a dispute involving allegations that an ESOP paid more than “fair market value” for stock of the sponsor company. In a recent webinar, McDermott attorney Richard Pearl discussed valuation concepts and some fundamental issues under the Employee Retirement Income Security Act.

Fair Market Value: Are the DOL & Some Courts Getting It Wrong?

by Richard J. Pearl | Aug 18, 2020 | Employee Stock Ownership Plans (ESOPs)

McDermott’s Rick Pearl took part in the NCEO 2020 Employee Ownership Virtual Conference. In his presentation, Pearl gave an overview of ERISA standards for an ESOP transaction, discussed fair market value, and whether the US Department of Labor and some courts are getting it wrong.

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More Caring: New CARES Act Guidance for Retirement and Nonqualified Plans

by Diane Morgenthaler and Sarah L. Engle | Jul 15, 2020 | Employee Benefits, Employee Stock Ownership Plans (ESOPs), Executive Compensation, Retirement Plans

New Internal Revenue Service (IRS) guidance expands the availability of Coronavirus Aid, Relief and Economic Security Act (CARES Act) distributions and loans under eligible retirement plans, and it provides important clarifications regarding how to administer and report CARES Act distributions and loans. The guidance also provides welcome relief for a participant who receives a CARES Act distribution, allowing the participant to revoke an otherwise irrevocable salary deferral election under a nonqualified deferred compensation plan. Finally, consistent with prior guidance, the new IRS guidance confirms that CARES Act provisions are optional, meaning that plan sponsors may choose whether to implement CARES Act changes.

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Investor Guidelines for Shared Value Creation in Employee Ownership Transitions Unveiled

by Ted Becker | Feb 27, 2020 | Employee Benefits, Employee Stock Ownership Plans (ESOPs), Fiduciary and Investment Issues

One of the big questions for the employee ownership field is, why has the number of US employee-owned firms failed to grow significantly over the last couple of decades?

An upcoming paper from Fifty by Fifty proposes that the barrier to growth is a lack of agency. Employees don’t have the knowledge, skills or capital to pursue a buyout of their employer; and employers, knowing little about the benefits of selling to employees, are more likely to respond to an opportunity that knocks on their door, such as an offer from a private equity firm or a strategic buyer. McDermott’s Ted Becker and Erin Turley share their thoughts on the guidelines in a recent article published on Medium.

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Originally published on Fifty by Fifty, January 29, 2020

Federal Court Dismisses Challenge to ESOP Transaction

by J. Christian Nemeth and Richard J. Pearl | Aug 13, 2019 | Benefit Controversies, Employee Benefits, Employee Stock Ownership Plans (ESOPs), Fiduciary and Investment Issues

In Lee v. Argent Trust Co., the court dismissed ERISA claims challenging an ESOP stock transaction because the plaintiff, who “fundamentally misunderstands the nature of the” ESOP transaction, did not allege that she suffered any injury. This decision is important to educate other courts about economics, particularly in cases where plaintiffs rely on little more than the post-transaction valuation as evidence of supposed overvaluation.

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Kruse-Western Wins Partial Dismissal in ERISA Lawsuit over $244 Million Stock Sale

by Charnae Supplee and Richard J. Pearl | Aug 6, 2019 | Benefit Controversies, Employee Stock Ownership Plans (ESOPs), Retirement Plans

The federal court affirmed ERISA’s limitations on the types of claims and remedies available under ERISA. This well-reasoned decision affords Congress the deference it deserves by limiting claims and remedies only to those Congress intended to provide in ERISA.

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