Employee Stock Ownership Plans (ESOPs) Archives - Page 9 of 15

Supreme Court Rejects “Presumption of Prudence,” Adopts New Pleading Standards in Fifth Third Bancorp v. Dudenhoeffer

by Wilber H. Boies, PC, Chris C. Scheithauer and Stephen Pavlick | Jul 15, 2014 | Employee Stock Ownership Plans (ESOPs), Retirement Plans

In a highly anticipated decision, the Supreme Court recently ruled that ESOP fiduciaries are not entitled to a presumption of prudence under ERISA in connection with their decisions to buy, hold or sell the employer’s securities. While the elimination of this presumption is a loss for ESOP fiduciaries, the decision imposes additional burdens on plaintiffs that will make it easier for plan sponsors and fiduciaries to defend so-called “stock-drop” cases. It also requires plan sponsors to reevaluate plan language requiring that certain funds be invested in employer securities and to reconsider hiring an independent fiduciary to manage the employer stock fund.

Read the full article.

Transaction Structures for Acquisitions by ESOP Companies

by McDermott Will & Emery | Jun 5, 2014 | Employee Stock Ownership Plans (ESOPs)

ESOPs have long provided an exit strategy for owners of privately held businesses and a platform for management buyouts. Mergers and acquisition (M&A) advisors increasingly look to leveraged ESOPs to accomplish both conventional stock and asset acquisitions.

Once an ESOP company decides to pursue an acquisition opportunity, it will generally structure in one of three ways. As more fully described in the following article, the acquiring company will (1) buy the stock or the assets of the target division or company; (2) merge with the target; or (3) have the target create a new ESOP, sell the target to the newly created ESOP, and then merge the ESOP that purchased the target with the acquiring company’s existing ESOP.

Read the full article.

Supreme Court Takes Case About Company Stock Funds and Presumption of Prudence

by Wilber H. Boies, PC and Chris C. Scheithauer | Jan 9, 2014 | Benefit Controversies, Employee Stock Ownership Plans (ESOPs), Retirement Plans

The Supreme Court of the United States granted certiorari in Fifth Third Bancorp v. Dudenhoeffer, suggesting that the Supreme Court will resolve the current division among U.S. circuit courts regarding the application of the “presumption of prudence” in employer stock cases.

To read the full article, click here.

Employee Benefits & Compensation: What You Should Do Before Year End

by McDermott Will & Emery | Nov 7, 2011 | Employee Stock Ownership Plans (ESOPs), Employment, Executive Compensation, Fiduciary and Investment Issues, Health and Welfare Plans, Labor, Retirement Plans

Friday, November 18, 2011
10:00 – 11:00 am CST

As the year draws to a close, please join us for a focused and concise update on the most important employee benefit issues.

Mark your calendars
McDermott Will & Emery will present a 60-minute complimentary webcast, hosted by the leaders of our employee benefits and compensation practice, that will highlight key year-end considerations for:

Health and welfare benefits
Qualified and non-qualified retirement plan
Plan fiduciary and investment management
Executive compensation
Fringe benefits
Domestic partner benefits

Who should attend
All vice presidents of human resources, in-house counsel, compensation and benefits directors, chief financial officers and others responsible for overseeing corporate or executive benefits and/or retirement plans.

To register, please click here.

For more information, please contact McDermott Events.

No Seventh Circuit Rehearing in Kraft ERISA “Excessive Fees” Case

by McDermott Will & Emery | Jun 9, 2011 | Benefit Controversies, Employee Stock Ownership Plans (ESOPs), Fiduciary and Investment Issues, Retirement Plans

by Chris C. Scheithauer and Joseph S. Adams

As previously described in this blog earlier this year, a divided Seventh Circuit panel reversed summary judgment in favor of Kraft Foods Global, Inc. in a class action involving allegedly excessive fees in the Kraft 401(k) plan. Shortly thereafter, Kraft petitioned for rehearing of the case by the entire Seventh Circuit Court of Appeals en banc. Further, a “friend of the court” brief submitted jointly by The ERISA Industry Committee (ERIC), the American Benefits Council (ABC), the Profit Sharing/401k Council of America (PSCA), and U.S. Chamber of Commerce urged the Seventh Circuit to rehear the case en banc.

However, on May 26, 2011, in a single page opinion, the Seventh Circuit denied Kraft’s motion, noting that no judge in active service for the Seventh Circuit requested a vote on the petition for rehearing en banc and that the original three judge panel voted 2-1 against rehearing the case – the same split as in the panel’s original order reversing summary judgment.

As a result, the Seventh Circuit’s original order reversing summary judgment will likely be the “go-to” cite for plaintiffs’ attorneys seeking to escape summary judgment on excessive fee claims. However, as noted by the dissent in that order, the Seventh Circuit’s decision “will only serve to steer [fiduciaries’] attention toward avoiding litigation instead of managing employee wealth.”