Employee Stock Ownership Plans (ESOPs)
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ERISA Plan Controversy | Rising Stakes for Those Unprepared

In a presentation at McDermott’s Employment and Employee Benefits Forum, Ted Becker and Chris Scheithauer explored the various ways that disgruntled employees file lawsuits with plaintiffs’’ lawyers. Lawsuits have been brought in cases alleging, imprudence in the management of plans, challenging fees, involving company stock, actuarial equivalence and more. They used recent cases such as, NYU, American Century Services and IBM, as examples of the various types of lawsuits and the important lessons employers can take away from them. In addition, they provided attendees with key strategies to minimize exposure to lawsuits, including demonstrating a thoughtful and deliberative decision-making process. Looking ahead to 2019, they touched on ERISA issues to watch for including, venue/forum selection clauses in plan documents, arbitration agreements and impact on fiduciary duty claims, statute of limitations and burden of proof issues. View the full...

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Fridays With Benefits Webinar | ERISA Litigation – Are You Bullet-Proofed for the Inevitable?

What to expect in 2019 and how to prepare now. Join McDermott lawyers Judith Wethall, Ted Becker and Rick Pearl for an interactive discussion regarding ERISA litigation trends. Join our lively 45-minute discussion while we tackle the following items: Plaintiffs’ law firm’s solicitations Health & Welfare Fee Litigation Defined-Benefit Plan Litigation – Actuarial Equivalence lawsuits and greater concern about discretionary decisions Stock-Drop Cases – The Jander decision: Relaxing the Dudenhoeffer standard and the potential impact of a stock market decline 401k/403b – Fee/investment update ESOP transactions – New DOL and plaintiffs’ counsel’s theories Friday, January 11, 2019 10:00 – 10:45 am PST 11:00 – 11:45 am MST 12:00 – 12:45 pm CST 1:00 – 1:45 pm EST Register now. 

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Circuit Split Remains Unresolved After ERISA Case Settles

On September 20, 2018, the US Supreme Court dismissed—pursuant to settlement—an ERISA lawsuit that could have resolved the circuit split over who holds the burden of proof in ERISA breach of fiduciary duty cases. In Pioneer Centres Hold. v. Alerus Fin., Case No. 17-677 (2018), the Pioneer Centres Holding Company Employee Stock Ownership Plan and Trust (the “Plan” or “ESOP”) and its trustees sued Alerus Financial, N.A. (Alerus) for breach of fiduciary duty in connection with the failure of a proposed employee stock purchase. In affirming summary judgment in Alerus’s favor, the Tenth Circuit determined that the Plan carried the burden to prove causation rather than shifting the burden to Alerus to disprove causation once the Plan established a prima facie case. In so holding, the Tenth Circuit agreed with the Sixth, Ninth and Eleventh circuits that beneficiaries, not fiduciaries, must prove causation between the company’s conduct and the plan’s losses due to a...

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Lessons Learned from ESOP-Owned Companies from Recent Litigation

Recent litigation and audit activity is focusing on the process undertaken by fiduciaries in connection with a transaction involving an ESOP. Eliot Burriss presented at the 2018 National Center for Employee Ownership Conference summarizing relevant litigation cases, exploring roles and responsibilities, and providing best practices. View the full presentation.  

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ESOP Fiduciary Responsibility for Value Determination

Emily Rickard presented “ESOP Fiduciary Responsibility for Value Determination” at the National Center for Employee Ownership National Conference addressing the fiduciary duties involved in the selection of an ESOP appraiser and the review of a valuation report. View the full presentation.

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What the Demise of the DOL’s Fiduciary Rule Means for Plan Sponsors

The Department of Labor's fiduciary rule has recently been rendered unenforceable following a recent 5th Circuit Court of Appeals decision. In an article published by the Society for Human Resource Management, McDermott partner Brian Tiemann weighs in on what this means for plan sponsors. "As a result of the Fifth Circuit's ruling, the suitability standard is effectively restored" for advising plan participants on investments, distributions and rollovers, Tiemann observed. He also points out that advisors may want to revise service agreements with plan fiduciaries to clarify the scope of advice that fiduciaries will provide participants. Access the full article. Originally published by the Society for Human Resource Management, May 2018.

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Unique ESOP Structure Considerations

ESOP transactions continue to grow in sophistication as sellers, plan sponsors and fiduciaries seek to meet certain goals and regulatory requirements. Allison Wilkerson, and other panelists for this presentation, reviewed a number of advanced transaction structures that are being utilized more and more to address specific needs identified by one or more of the parties involved in the arrangement. Such structures include the use of warrants in a financing structure, implementation of clawback and/or earn out requirements, use of incentive plans for successive management, and provisions that may be impactful with respect to future transaction or planning. This presentation provides information to those companies/sellers/ESOP fiduciaries who are pursuing an ESOP transaction with alternatives that may provide an opportunity to better address the goals and objectives of the shareholders, ESOP, Company, employees and other stakeholders. View full presentation.

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Navigating the Challenges of Cross-Border M&A Transactions

Last month, Alexander Lee and Maureen O’Brien joined with Rob Wellner from Velocity Global to discuss the tax and employee benefits complications that arise in cross-border transactions. Key points discussed: Complex tax structures must be considered and understood Transfers of employment may be governed by different statutes in each affected jurisdiction Purchasers may not be ready to provide employment, payroll and benefits on the closing date without significant pre-closing work View full presentation.

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Compensation for Privately Held Companies

Allison Wilkerson presented on a panel at the National Center for Employee Ownership (NCEO) Conference. The panel provided an overview of issues impacting compensation matters, as well as decisions affecting privately held companies that are wholly or partially owned by an ESOP.  The presentation included an analysis of certain legal requirements and a current view on best practices.  Finally, the panelists provided real-life examples of effective compensation programs and decision-making strategies for executive and staff compensation. Access full presentation.

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Webinar | Benefits Litigation – An Ounce of Prevention

Join us for a webinar on Friday, May 4 as McDermott litigation attorney Chris Nemeth joins employee benefit attorney Judith Wethall to discuss what’s new in employee benefits litigation. Chris will give you a peek into a world you hope never to go! Learn about disturbing trends, traps and how to prevent your employee benefit plans from being targeted. Friday, May 4, 2018 10:00 – 10:45 am PDT 11:00 – 11:45 am MDT 12:00 – 12:45 pm CDT 1:00 – 1:45 pm EDT Register now.

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