Month: June 2003

This article posted at MIT Enterprise Technology Review and recommended by Tom Mighell at Inter Alia is a good one. Thanks, Tom!

Gary Young for the National Law Journal at Law.com reports on the case of Millsap v. McDonnell Douglas Corp., No. 94-CV-633-H, from the Northern District of Oklahoma. The case, according to Law.com, represents only a handful of cases in which employees have prevailed in a claim that their employer violated ERISA “by closing a plant with the intent to shed employees whose benefit costs were high or who were on the verge of vesting in pensions.” Unfortunately, the $36 million settlement will never reach the hands of plaintiffs unless a 10th Circuit Court accepts the Court’s certification of its September 25, 2002 order denying McDonnell’s motion for summary judgment on the issue of back pay. Many are saying the “backpay” issue is doomed under the holding of Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204, decided by the U.S. Supreme Court last year.

With all the bad news about Social Security and corporate pensions, this article by Robert Brokamp for the Motley Fool via Yahoo! News has the answer: open an IRA.

Today’s Federal Register is here.

French transport workers are again striking over pension changes as reported by Bloomberg.com.

Bloomberg.com also has this article: “U.S. Economy: Pension Costs Rise, Threatening to Slow Growth.”

CFO.com has this report on the rankings in the corporate governance report by Corporate Library discussed here yesterday.

There have been multiple posts here about the issue of whether 906 Certifications are required for SEC Form 11-Ks for employee benefits plans. The SEC recently came out with a statement discussed here that it is deliberating on the whole issue. Assuming the certification is required, it has been suggested that the proper party to sign the 906 Certification probably is the chair of the plan committee which is normally appointed to oversee the plans, since the plan is really the “issuer” in this context. This should really cause a stir in the plan fiduciary community! They are still reeling from all of the fallout from Enron and the ERISA fiduciary litigation which is running through the courts. So, now they are not only subject to personal liability for fiduciary violations under ERISA, but they are subjected to possible criminal liability under Sarbanes-Oxley as well? Since I am not a securities lawyer, am I right on this? After the DOL’s Amicus Brief in the Enron case, many practitioners are advising that high level individuals in the company (with insider information) not be allowed to serve on plan committees where employer stock is involved, due to the conflicts which may arise, so who would be left to sign these certifications? If readers are so inclined, comments would be welcome . . .

Today’s edition of the Wall Street Journal reports on the ratings release today by Corporate Library, a governance-research firm, which ranks companies on corporate governance. Unlike Institutional Shareholder Services Inc.(“ISS”) the leading proxy-advice firm which has been the subject of reports in the Journal last week and the subject of this blog today, Corporate Library refuses to take consulting or other fees from its ratings subject, according to the Journal. A common thread among those companies ranked the worst in corporate governance were lavish compensation and benefits to executives.

A real disappointment! PlanSponsor.com has reported that the House of Representatives has abruptly pulled from the schedule the Comp Time Bill that was going to be voted on. This bill would have allowed employees to choose between getting overtime pay or compensatory time off, both calculated at a time-and-a-half rate. The bill, called the Family Time Flexibility Act, would have been particularly good for families, allowing individuals to spend time with their families instead of receiving overtime pay. It would have also been good for employers who would not have had the expense of paying the overtime during these tough economic times. Apparently, the bill did not have enough support from “pro-business Democrats to counter opposition from a sizable pro-labor bloc among the 228 House Republicans.”

Benefitslink provides us with IRS Revenue Ruling 2003-65 to be published soon. The ruling provides that years of service earned following the establishment of a plan must be counted for vesting purposes under a frozen plan which is later amended to provide for a new benefit formula. The ruling also provides: “If, instead, the accruals are earned under a new plan maintained by the same employer and the new plan is merged with the frozen plan, then this holding also applies, so that, after the merger, service after the frozen plan was established must be taken into account for purposes of vesting in any benefit accruals under the new plan.”

Benefitslink points us to this Special Report which has it all when it comes to learning about the IBM cash balance plan conversion case to be decided soon and discussed here yesterday.