Executive Compensation and Employee Benefits Update

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Employee Benefits Update

 Executive Compensation Litigation  Pension Protection Act  State benefit mandates  Employee Benefit Class Actions  Retiree Medical ADEA Litigation (3d Cir. case) and EEOC Exemption  Prescription Contraception Exclusion under Health Plans (8 th Cir. case)

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Employee Benefits Update

 Stock Option Backdating 

Ryan v. Gifford

(Del. Ch. 2007) – Executive Compensation Outline, p. 27, and Newsletter Vol. 3 No. 4. The court was “convinced that the intentional violation of a shareholder-approved stock option plan, coupled with fraudulent disclosures regarding the directors’ purported compliance with that plan, constitute conduct that is disloyal to the corporation. . ..”

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Employee Benefits Update

 Spring-Loaded Options 

In re Tyson Foods, Inc.

(Del. Ch. 2007) – p. 32 and Newsletter Vol. 3 No. 4. Allegations that “directors that approved spring-loaded (or bullet-dodging) options (a) possessed material non-public information soon to be released that would impact the company’s share price, and (b) issued those options with the intent to circumvent otherwise valid shareholder approved restrictions upon the exercise price of the options” would satisfy the plaintiff’s requirement to show adequately at the pleading stage that a director acted disloyally and in bad faith and is therefore unable to claim the protection of the business judgment rule.

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Employee Benefits Update

 Attorney-Client Privilege: Top-Hat Plan 

Marsh v. Marsh Supermarkets, Inc.

Ind. 2007) – p. 45 (S.D.  SERP Compensation Definition: Stock Option Gains 

Adams v. Louisiana-Pacific Corp.

2006) – p. 52 (4 th Cir.

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Employee Benefits Update

 SERP Compensation Definition: Severance Pay 

Gilliam v. Nevada Power Company

(9 th 2007) – p. 55  Top-Hat Plan: Release, Fiduciary Claims, Estoppel Cir. 

Callahan v. Unisource Worldwide, Inc.

Conn. 2006) – p. 59 (D.

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Employee Benefits Update

 Stock Options: Negligent Misrepresentation, Period for Exercise 

First Marblehead Corp

.

2006) – p. 67  Oral Grant of Options

v. House

(1 st Cir. 

Aretakis v. General Signal, Inc.

2006) – p. 73 (D. Mass.

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Employee Benefits Update

 State Wage Payment Statutes 

Paolini v. Albertson’s Inc.

83 (9 th Cir. 2007)  Stock Options: Failure to Tender Payment with Exercise Notice – p. 

Deal v. Consumer Programs, Inc.

2006) – p. 84 (8 th Cir.

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Employee Benefits Update

 Covenants Not to Compete 

Morris v. Schroeder Capital Management International

(2d Cir. 2007) – p. 94  Severance: Outsourcing, Prior Employer’s Representations 

Engler v. Cendant Corp.

p. 107 (E.D. N.Y. 2006) –

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Employee Benefits Update

 Pension Protection Act  Defined benefit plan funding rules (PPA Outline, pp. 1-26)  Cash balance plans (pp. 29-36)  Phased retirement: In-service distributions from defined benefit plans (p. 38)  Automatic enrollment (pp. 40-47)

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Employee Benefits Update

 Pension Protection Act (cont.)  Faster vesting for employer non-matching contributions to defined contribution plans (pp. 47-49)  ERISA Section 404(c): Participant investment decisions (pp. 49-52)  Investment advice (pp. 52-57)

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Employee Benefits Update

 Pension Protection Act (cont.)  Publicly-traded employer securities in defined contribution plans: Participants’ right to diversify (pp. 57-61)  Plan amendments (pp. 75-76)

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Employee Benefits Update

 State Benefit Mandates  Massachusetts health care reform • Requirements • Preemption  Vermont health reform   Suffolk County preemption case San Francisco mandates • Sick leave • Health insurance

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Employee Benefits Update

 Employee Benefit Class Actions   Cash balance plans “Stock drop” cases   Retiree welfare benefits 401(k) fee disclosure

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Employee Benefits Update

 Retiree Welfare Benefits (Termination of Retiree Medical Coverage Upon Medicare Eligibility Outline)  EEOC Exemption and

Erie County

Decision  Prescription Contraception Exclusion in Health Plans (Prescription Contraception Exclusions Under Health Plans Outline) 

In re Union Pacific Railroad Employment Practices Litigation

(D. Neb. 2005).

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