Employee Stock Ownership Plans (ESOPs) Archives | Page 8 of 15

ESOP Trends in the Marketplace

by Allison Wilkerson | May 25, 2017 | Employee Stock Ownership Plans (ESOPs)

Over the years, employee stock ownership plans (ESOP) have evolved in many ways. Currently, ESOP transactions began to resemble traditional M&A transactions including financial structures, warrants and market rate sub-debt. In a recent presentation at the NCEO Employee Ownership Conference, Allison Wilkerson discusses current marketplace trends in structuring ESOP transactions, including the importance of pre-transaction structure analysis and post-transaction planning. Allison also goes over the beneficial tax planning opportunities associated with ESOP transactions.

See presentation slides here.

Upcoming Employee Benefits Innovators Roundtable Series!

by McDermott Will & Emery | May 4, 2017 | Benefit Controversies, Employee Benefits, Employee Stock Ownership Plans (ESOPs), Employment, Executive Compensation, Fiduciary and Investment Issues, Health and Welfare Plans, Labor, Privacy and Data Security, Retirement Plans

McDermott will be holding its annual Employee Benefits Innovators Roundtable Series this month. The roundtables offer experienced benefits professionals an opportunity to discuss cutting-edge, topical employer-driven benefit programs with their peers and members of McDermott’s employee benefits team. We are meeting in four locations this year. Join us in one of the following cities:

May 9 | Silicon Valley, California

May 11 | Los Angeles, California

May 22 | Chicago, Illinois

May 24 | New York, New York

The topics for our roundtable series sessions will include:

The Future of Employee Benefits Under the Trump Administration
Should Your Plan Cover All Drugs? (FDA-Approved/Unapproved, Off-Label, Marijuana, etc.)
ERISA Retirement Plan Fee Litigation – Learning From Recent Class Actions
Paying Off Student Loans as an Employee Benefit
Equal Privacy and Cybersecurity – Now Part of Your Plan’s Independent Audit
Human Rights Campaign (HRC) Equality Index – Opposite-Sex Domestic Partner Benefit

For more information about how to register for one of our roundtables, please contact Erin Nelson.

Acquisition Strategies for ESOP Companies

by McDermott Will & Emery | Nov 22, 2016 | 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 leverages 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 below, the acquiring company will (1) buy the stock or the assets of the target division or company; (2) merge with the target; (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.

Maintaining Retirement Plan Documents after Revenue Procedure 2016-37

by Andrew Liazos | Oct 13, 2016 | Employee Stock Ownership Plans (ESOPs), Retirement Plans

At the 2016 Joint Fall CLE Meeting on October 1, 2016, Andrew Liazos presented on “Maintaining Retirement Plan Documents after Revenue Procedure 2016-37.”

As an employer sponsoring a retirement plan, you are required by law to keep your books and records available for review by the IRS. Having these records will also facilitate answering questions when determining participants’ benefits. As a plan sponsor you should keep the plan and trust document, recent amendments, determination and approval letters, related annuity contracts and collective bargaining agreements.

The presentation highlights key changes under Revenue Procedure 2016-37 and the consequential impacts on annual audits, plan drafting, choice of plan, existing plan administration, EPCRS and other various transactions.

View presentation slides.

Advantages of Using ESOPs To Structure Acquisitions and Divestitures In An Uncertain Economy

by McDermott Will & Emery | Aug 25, 2016 | Employee Stock Ownership Plans (ESOPs)

M&A advisors are becoming increasingly familiar with leveraged ESOP transactions and are routinely considering the ESOP platform in structuring acquisitions and divestitures. The first part of this article references the ways in which leveraged ESOPs have historically been used to provide a tax-advantaged exit strategy for privately held business owners. The article then discusses the advantages the leveraged ESOP structure can bring to M&A advisors and private equity groups charged with structuring acquisitions and divestitures during a down economy.

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View From McDermott: Fifth Circuit Focuses on Process in ESOP Valuations

by Allison Wilkerson | Jul 28, 2016 | Employee Stock Ownership Plans (ESOPs), Labor, Retirement Plans

Though the Supreme Court’s 2014 unanimous ruling in Fifth Third Bank v. Dudenhoeffer announced the Employee Retirement Income Security Act (ERISA) standards for stock valuation in the context of a large public employee stock ownership plan (ESOP), the vast majority of ESOPs are still grappling with valuation issues. ESOPs that hold stock of closely-held corporations—approximately 90% of all ESOPs— remain almost unaffected by Dudenhoeffer’s valuation discussions, and face continued scrutiny by the Department of Labor (DOL). Appraisal of closely-held stock is an inexact science that involves an inherent level of uncertainty in assessing a variety of potential fact patterns.

This article summarizes valuation issues in acquisitions of closely-held corporation stock by ESOPs in the context of Perez v. Bruister, a recently decided Fifth Circuit case. The case stressed the importance of ‘‘process’’ in valuation determinations being utilized for acquisitions of a corporation’s stock by an ESOP. In reviewing the case, this article provides a detail of the process that should be followed to ensure consideration of the appropriate factors by fiduciaries in reviewing valuations for ESOP transactions. The article concludes with a discussion of guidance provided by the court in Bruister that may be instructive as to best practices for ESOP fiduciaries charged with establishing the value to be used by an ESOP holding shares of stock of a private company.

View full report.

Supreme Court Emphasizes Heightened Pleading Standard for Stock Drop Cases

by McDermott Will & Schulte | Mar 4, 2016 | Employee Stock Ownership Plans (ESOPs), Fiduciary and Investment Issues, Health and Welfare Plans

On January 25, 2016, the Supreme Court of the United States issued a per curiam opinion in Amgen Inc. v. Harris, holding that the Amgen, Inc. employees who filed suit after the value of the employer stock in which they had invested dramatically decreased, failed to sufficiently plead a breach of fiduciary duty claim under ERISA in light of the Court’s decision last term in Fifth Third Bancorp v. Dudenhoeffer.

Read the full article.

IRS Announces Employee Benefit Plan Limits for 2016

by Diane Morgenthaler, Jeffrey Holdvogt and Jacob Mattinson | Oct 23, 2015 | 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 2016. Although some of the dollar limits currently in effect for 2015 will change, the majority of the limits will remain unchanged for 2016.

Read full article.

Ruling on UK Executive’s Lawsuit Involving U.S.-Based Stock Option Plan

by Katie Clark | Oct 8, 2015 | Employee Benefits, Employee Stock Ownership Plans (ESOPs), Employment

The English Court of Appeals ruled that UK court has jurisdiction over UK executive’s lawsuit involving a U.S.-based stock option plan, despite the stock option plan’s clear language requiring Massachusetts choice of law and jurisdiction. Multinational companies sponsoring broad-based employee plans should be on notice that non-EU exclusive jurisdiction clauses may not be enforceable against EU-based employees.

Read the full article.

Recent Case Law Suggests Corporations Should Implement Limits on Director Equity Awards

by Andrew Liazos | Sep 8, 2015 | Employee Stock Ownership Plans (ESOPs), Executive Compensation, Fiduciary and Investment Issues

Recent case law suggests that corporations should consider implementing limits on director equity awards similar to those implemented for executives. The current practice is to include director equity awards in stockholder approved “omnibus” stock plans that also cover executive officers and key employees. However, unlike for certain executives, there are no regulatory requirements regarding limits on directory equity compensation.

Two recent cases brought by shareholders arguing that corporations essentially overpaid their directors are leading companies to revisit the practice of not having any limits on director equity compensation. Both cases survived motions to dismiss; one case is settled while the other remains active. In an article published by Bloomberg BNA, Andrew C. Liazos, partner at McDermott Will & Emery, noted that additional cases are being filed regarding director compensation using a variety of state corporate law claims.

Given the case law and threat of additional litigation, corporations should begin designing limits for director equity compensation. For more discussion on this topic, read the attached presentation co-authored by Mr. Liazos.

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