Category: Benefits

“Lawyers Get Big Raises At Top Corporations“: Kara Scannell for the Wall Street Journal today reports on how general counsels received the biggest pay raises in decades in 2002. (Subscription required.) The article quotes Robin Sparkman, editor-in-chief of Corporate Counsel magazine, which conducted the survey that runs in the August issue, as saying that this is a “good gauge industrywide of how companies are taking their general counsel much more seriously.” The article reports Sarbanes-Oxley compliance as being one of the main reasons for the rise in pay.

Milliman USA provides a discussion of the proposed section 401(k) and 401(m) regulations issued last week: “Client Action Bulletin: Proposed 401(k) Regulations Restrict Bottom-Up QNECs.”

Here are some helpful links in accessing the Portman-Cardin legislation which passed the House Ways and Means Committee Friday:

• Description of the Chairman’s Amendment In the Nature of a Substitute to HR 1776, the “Pension Preservation and Savings Expansion Act of 2003” issued by the Joint Committee on Taxation
• Joint Committee of Taxation’s Estimated Revenue Effects of the Chairman’s Amendment In the Nature of a Substitute to HR 1776, the “Pension Preservation and Savings Expansion Act of 2003
• Chairman Bill Thomas’s Summary of the Proposed Legislation

(Thanks to Benefitslink.com for the links.)

Today’s Federal Register contains temporary and proposed regulations concerning requirements for employee stock ownership plans (ESOPs) holding stock of S corporations. The regulations provide guidance on identifying disqualified persons and determining whether a plan year is a nonallocation year under Internal Revenue Code section 409(p) and on the definition of synthetic equity under Internal Revenue Code section 409(p)(5).

Several news sources are carrying this Associated Press article today (this one via ABCNews.com): “Don’t Fret Over Pension Notice: Don’t Immediately Fret Over Notice From Employer of Underfunded Pension.”

Stephen Taub for CFO.com provides this report: “Ways and Means of Relieving Underfunded Pensions: Committee’s recommendation to full House of Representatives may ”free up cash for other corporate uses.” The article reports that shortly after the announcement that the Portman-Cardin bill had passed the Ways and Means Committee, Standard and Poor released a statement that its estimate of pension underfunding for the S&P 500 is under review. You can read the press release here. The press release provides:

“If the House approves the proposed three-year use of the high-grade corporate bond rate, which is currently yielding 128 basis points higher than the 30-year Treasury, the amount of pension underfunding among U.S. companies would significantly decrease, resulting in lower corporate contributions to their pension funds. . . This change would free up cash for other corporate uses.”

Business Week Online provides this op-ed by Steve Hamm: “Commentary: Expense Options–but Give Startups a Break.” The article discusses how FASB is open to creating special rules for Pre-IPO nonpublic companies.

Albert Crenshaw for the Washington Post discusses “bottom-up leveling” in 401(k) plans in this article: “How a 401(k) Loophole for the Rich Can Mean a Windfall for the Poor.”

Susan Tempor for the Detroit Free Press writes: “Tax law changes add 401(k) quirks.”

Reish Luftman McDaniel & Reicher provides this article: Taking Stock: Managing the Risk of Company Stock. The article provides some good suggestions for minimizing ERISA fiduciary risk where a 401(k) offers company stock as a match and/or as an investment option.

(Note: The article does not discuss plan governance structure or procedural prudence which, in my opinion, are also very important in minimizing ERISA fiduciary liability.)

Gardner Carton & Douglas provides the following updates:

• Investments in Employee Stock Ownership Plans Clarified Through Recent Developments
• Executive Compensation Update

Articles on the events of yesterday regarding the House Ways and Means Committee mark-up of the Portman-Cardin Bill (HR 1776):

• The Washington Post: “The House That Roared: In Ways and Means Brawl, Names, Police and Sergeant at Arms Are Called.”
• New York Times: “Sound, Fury, Pension Rules: Nasty Party Clash in House.”
• Reuters via Yahoo! News.com: “Tempers Flare in House Over Pension Bill.”
• The Associated Press via Yahoo! News.com: “House Melts Down After Pension Flap.”

The most important statement, in my opinion, came from the Washington Post article:

The bill passed the committee with no Democratic votes. “I’ve been here nine years, and this is one of the saddest days we’ve had in the House,” said Rep. Ray LaHood (R-Ill.). “What has happened to the Democrats is shameful; it’s embarrassing to our party. I’m sad for our party, and I’m sad for the House.”

The Post also reports:

“This is simple, serious and sad,” said Ways and Means member Nancy L. Johnson (R-Conn.), adding that both parties made mistakes that were “destructive to the body.”

Ironically, the Post also reports that many Democrats support the “bill that sparked yesterday’s furor.”

Kilpatrick Stockton LLP provides this analysis of the final catch up regulations–“Final Catch Up Regulations Issued“–as well as this analysis of the proposed 411(d)(6) regulations–“IRS Proposed to Eliminate Advance Notice of Anti-Cutback Regulations.”

Steve Gillmor’s reflections on RSS are captivating: “The Sound of Silence.” (Thanks to Dennis Kennedy for the link.)

Thank you, Benefitslink, for these invaluable resources:

• Text of ABA Joint Committee on Employee Benefits 2003 Q&As with SEC Officials
• Text of ABA Joint Committee on Employee Benefits 2003 Q&As with Internal Revenue Service Officials

These Q&As have some important information in them (for instance, you might want to check out items 8, 17 and 18 of the IRS Q&As.)