ESOPs and security design: common stock, super common, or convertible preferred?

Article Abstract:

The relative merits of using convertible preferred stock, common stock or super common stock in the security design of employee stock ownership plans (ESOPs) depend on the needs of the participants and the resources available. Convertible preferred stock helps to reduce dilution and to service the ESOP debt, but the application of IRC section 306 may reduce the tax deferral benefits of IRC section 1042. The use of super common stock may be the most effective way to eliminate section 306 problems.

Pension, health, and welfare funds, Pension Funds, Stock Ownership Plans, Investments, Employee stock ownership plans

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When talk isn't cheap: scrutinizing fiduciaries' communications to ERISA plan participants

Article Abstract:

Communications with plan participants and the failure to communicate can trigger breach of fiduciary liability for benefit plan administrators under the Employee Retirement Income Security Act. The Supreme Court's ruling in Varity Corp. v. Howe is expected to increase the potential liability of plan administrators and sponsors. A review of fiduciary obligations focuses on the fiduciary duty to disclose, the duty not to mislead and distinctions drawn between sponsors and administrators.

Pension Fund Administration, Management, Laws, regulations and rules, Pension funds, Qualified benefit plans, Financial management, Fiduciary duties

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