Pension parachutes: more weapons in your arsenal to ward off a hostile takeover

Article Abstract:

Companies with overfunded pension benefit plans are likely targets for hostile takeovers; consequently, these companies have developed "pension parachutes" to deny purchasing firms the cash flow improvements expected from the overfunded plans. These parachutes generally take one of the following forms: (1) the plan is amended to automatically dispose of surplus assets by accelerating or increasing participants' benefits under the plan, should a corporate takeover occur; (2) the plan is amended to require the application of surplus assets to health benefits for plan members only; (3) the plan is amended to terminate upon a change in corporate control, with surplus assets flowing into a then-established employee stock ownership plan; or (4) the plan is amended to increase participants' benefits immediately. Each type of parachute is explained.

Analysis, Acquisitions and mergers, Employee benefits, Corporate anti-takeover measures, Antitakeover strategies

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Pension and benefit perspectives: the changing climate

Article Abstract:

Changes in the economy, work force, employee attitudes, and legislative climate demand corresponding changes in the content and management of company benefit programs. New trends that have emerged include: a decline in defined benefit plans, a growth in 401(K) plans, an increase in cafeteria plans, a wide representation of employee stock ownership plans, and corporate efforts to control benefit costs.

Planning, Usage, Employee ownership, Cafeteria benefit plans

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