Month: June 2003

This link will take you to the Pension Benefit Guaranty Corporation website page listing all states which have received disaster relief from deadlines due to tornadoes, ice storms, etc. Illinois, Mississippi and Kentucky are among the most recent states which have been given relief.

Today’s edition of the Wall Street Journal has this important article (subscription required) by Jesse Drucker and Theo Francis: “Pensions Fall–Not CEO’s Bonus.” The article discusses how in good times, pension surpluses helped to boost corporate earnings which in turn increased executive compensation under executive bonus plans which were tied to net income. However, now that pension plans are underfunded, with many companies having to pump money into their pension plans, companies have been inserting special language into their bonus plans so that bonuses can continue to be paid, despite earnings, according to the article. The article quotes Carol Bowie, director of governance research at the Investor Responsibility Research Center, a Washington research and advisory firm for institutional investors as saying, “This pattern where pension surpluses are included for bonuses but pension expenses are excluded just underscores how these incentive programs can be manipulated in order to maximize payouts.” The article quotes a Verizon spokesman as saying that their executives have always been compensated “based on operational performance and strategic factors” and not based on “losses or gains in the pension fund.”

The 10b-5 Daily by Lyle Roberts has a good commentary on the wave of ERISA 401(k) litigation which has been the subject of multiple posts here.

Today’s Federal Register is here.

This article–“Ruling Approaches in IBM Pension Lawsuit”–by Arden Dale for the Associated Press at MercuryNews.com reports that a ruling in the IBM cash balance plan conversion case is forthcoming, with lawyers having submitted their final documents last week to U.S. District Judge G. Patrick Murphy, who is presiding over the case. (See previous posts on the subject here.)

Stock option expensing is becoming a hot topic among presidential candidates, as reported in this article by Laura Kurtzman at MercuryNews.com–“Gephardt backs foes of options expensing.” Also, this article for Reuters by Ben Klayman reports on the call for better valuation methods for stock options by Cisco Systems Inc. Chief Executive John Chambers: “New method to value options essential-Cisco CEO.”

The news is full of benefits issues today. Much more later . . .

Readers have been expressing interest in some links for the ERISA litigation which has been the subject of several posts so I will list some important ones here and will create a section in the index under “401(k) Litigation Links”:

• Amended DOL Amicus Brief in the Enron case
  
• Amended DOL Amicus Brief in the Enron case (on the DOL website)
  
• American Bankers Association Amicus Brief in the Enron case (Benefitslink website)
  
• SPARK Amicus Brief in the Enron case and Supplemental SPARK Amicus Brief (filed by the Groom Law Group)
• Summary and Analysis of DOL Amicus Brief (Prepared by Martha Hutzelman, Partner, Bosely Hutzelman)(American Benefits Council website)
  
• The DOL’s Enron Brief: What it Means for 401(k) Investments (by Fred Reish and Debra Davis, at Reish Luftman McDaniel & Reicher, and also published in the The ASPA Journal, March-April 2003)

VentureBlog has this discussion about stock option expensing.

Jim Calloway, Director for the Oklahoma Bar Association’s Management Assistance Program, has this great article on tools for electronic discovery which is a must link for litigators: “Tools for Electronic Discovery.”

That is what Ronald Kilgard of Keller Rohrback says about the wave of post-Enron litigation against 401(k) plan sponsors under ERISA. This article–“Send in the Lawyers: Ethical Lapses Spawn Fiduciary Lawsuits”–for Defined Contribution News discusses the lack of staffing at the DOL and reports why the DOL has seemed to focus on filing amicus briefs in the cases, instead of filing its own actions. The article reports Steven Saxon, a partner in the Groom Law Group, as saying the DOL “doesn’t have the staffing to do its own cases” so that they have “made a decision to expend resources in appellate work…to have an impact when they file an amicus.”

See yesterday’s post here for additional articles on the subject.