Practice/Industry Group Overview
An Integrated Approach
The Employee Benefits & Executive Compensation (EBEC) practice at Edwards Wildman uses a multidisciplinary approach that integrates our benefit professionals into complementary practice areas such as private equity, insurance, and trusts and estates. As such, our EBEC practice encompasses all aspects of employee benefit planning, including various ancillary considerations from other disciplines. We consider benefits an integral part of, and not isolated from, practical business and economic concerns. Our approach enables us to provide cost-effective, comprehensive benefits advice and sophisticated services to our national client base as well as smaller, middle market entities, private clients, and Fortune 100 companies.
Retirement Planning and Tax Exempt Organizations
We routinely design, implement, and provide on-going operational advice on tax-qualified retirement plans for single, as well as multiple, employers, including a full service practice dedicated to corporate transactions and liquidity planning (such as employee stock ownership plans). In addition, we help implement non-qualified alternatives such as excess plans or shadow arrangements that are integrated and coordinated with qualified benefit arrangements.
Our practice also encompasses benefit planning for tax exempt entities and governmental and church plans. We have extensive experience in 403(b) tax deferred annuity plans and 457 deferred compensation plans, including both tax-deferred and immediately taxable arrangements. We assist our clients with the integration of these benefit alternatives with more traditional programs.
- Representation of major service provider regarding creation of tiered structure defined benefit plan, non-discriminatory qualified plan arrangements and excess plans.
- Representation of subsidiary of public technology company in management buy-out of subsidiary utilizing an ESOP combined with equity capital.
- Representation of large privately-held disposal companies in design of leveraged ESOP for management buy-out with significant equity opportunity for management based on performance criteria.
- Creation of mechanism to accommodate conventional earn out and escrow arrangements within context of sale of government contractor with 40% ESOP and related issues regarding the termination of the plan.
We counsel clients on every aspect of executive and equity compensation, including stock option plans, restricted stock plans, employee stock purchase plans and deferred compensation plans as well as executive severance, change in control and employment agreements. We advise not only on the tax, securities, employment, and corporate law aspects of these arrangements, but also assist our clients in understanding associated non-legal issues such as plan design, accounting implications and the requirements of institutional investors. Our clients range in size from local start-ups through global companies with more than 100,000 employees. Frequently we work with foreign entities to extend equity compensation programs to their US based workforce.
- Successfully assisted client in obtaining shareholder approval of new equity compensation program despite opposition from Institutional Shareholder Services.
- Created severance arrangements and related agreements pertaining to employee issues following a WARN act notification in the manufacturing sector.
- Represented major public food industry company in the re-design of stock-based compensation alternatives on a post-Enron basis and related advice regarding fiduciary issues of corporate board members and ERISA fiduciaries.
- Represented public technology firm regarding substitution of performance-based restricted stock awards for redesign of stock option programs, underwater option issues and consultation regarding related NYSE issues.
- Designed program of stock appreciation rights agreement for public communications entity and privately-held manufacturer to reduce shareholder dilution while providing equity-based incentives.
Health, Death and Disability Plans
Our EBEC practitioners have extensive experience in health (insured and self-insured), death and disability plans and counsel on tax effective alternatives. We monitor developments in these areas so that our clients can take advantage of new concepts, such as health savings accounts, and integrate such new opportunities with existing programs. We are familiar with the nuances of FMLA, COBRA, HIPAA and other statutory requirements and can provide administrative checklists in model forms as well as perform internal audits to assess operational compliance.
- Advised buyer on implications of retiree health liability and structured termination of retiree health plan.
- Designed self-funded retiree health benefits program and obtained tax credit for participant contributions.
- Advised joint venture employer on application of MEWA rules to self-funded health plans.
- Coordinated conversion of fully insured medical plans to self-insured program for employee leasing organization, including coordination of stop loss coverage and internal/external administrative procedures.
Professionals in the EBEC group support the transactional attorneys in mergers, acquisitions, divestitures, public offerings, private equity, and bank financings. Our services range from negotiating the terms of the transaction and the provisions in the merger agreements as they relate to compensation and benefit matters, to identifying strategies for integrating disparate plans and resolving potential liabilities associated with COBRA, golden parachutes, retiree medical benefits, withdrawal liability, prohibited transactions and qualified plan terminations.
From a securities perspective, we are well suited to address the various securities exemptions available for employee benefit plans and satisfy any regulatory filing requirements. In addition, we are familiar with the requirements of the both the NYSE and NASDAQ regarding stock based compensation and can create and modify such programs taking into consideration issues such as repricing, underwater options concerns and the related shareholder approval requirements.
- Represented international entertainment firm regarding successor benefit issues in domestic acquisitions and related issues in securities offerings.
- Created benefit structure (retirement, health and executive compensation) for subsidiary after divestiture from high tech public parent in medical apparatus field.
- Represented target (tax-exempt hospital) in consolidation, related termination of acquiree benefit plans and corresponding negotiation of subsequent benefits under acquirer’s programs.
Plan Asset and Investment Representation
Our plan asset investment and counseling practice encompasses representation from both the investment as well as fund perspective enabling us to provide comprehensive analysis and design based on familiarity with each aspect of a transaction. Our professionals advise clients on the ERISA and tax aspects of plan investments, including plan assets, and address parties-in-interest, prohibited transaction and fiduciary issues. We review documentation for a wide range of investments including private equity, venture capital, hedge funds, and real estate as well as advise on alternative investment structures. In addition, we address complex issues on unrelated business income, including unrelated debt financed income, so that our clients may better understand the potential tax liabilities associated with the investment which allows us to help them structure alternatives to mitigate potential liability.
- Advised venture capital funds regarding “venture capital operating company” exception to the Department of Labor plan asset rules.
- Counseled investment funds on use of QPAM exemption to ERISA’s prohibited transaction rules.
- Reviewed and advised significant investment fund on issues pertaining to California state legislation and related impact on investment in vehicle.
- Represented large pension fund for telecommunications entity regarding investments in hedge funds and limited partnerships.
- Represented major financial institution regarding plan asset considerations and investment strategies for ERISA regulated clients of trust department.
A significant focus of our practice has, and will continue to be, directed at the fiduciary responsibilities of officers and directors of corporations and their equivalents in the employee benefit sector—trustees and committee members. We alert clients to developments through advisories and practical in-house presentations so that they may gain a comprehensive understanding of their fiduciary responsibilities and reduce their unanticipated liabilities. We focus on avoidance, not merely defense, for issues ranging from prohibited transactions to investment issues to the use of employer securities in a qualified plan arrangement.
- Representation of board members in action based on fiduciary misrepresentation as to value of plan assets in manufacturing sector.
- Representation of prior trustee of qualified plan sponsored by manufacturing concern regarding legal and ethical responsibilities in connection with actions of successor trustee.
- Representation as to proper method of unwinding prohibited transaction and related reporting requirements.
- Counseled management and board of manufacturing concern on ERISA-related fiduciary responsibilities and subsequent defense of DOL audit generated by disgruntled participants.
We work with regulatory agencies to resolve benefits issues of distressed companies, whether the concern is an underfunded pension plan or the continuation of retiree benefits. Having union experience, we can coordinate union and nonunion benefit issues under such economically distressed circumstances and facilitate a resolution satisfactory to all parties. In addition we design cost effective strategies that enable plan sponsors to continue to provide benefits as a reorganization is implemented and if a termination of an arrangement is imminent, we can advise and counsel as to the termination process on a regulatory acceptable basis.
- Negotiated on behalf of distressed entity with the PBGC and Department of Labor regarding imposition of personal liability for underfunded plans on officers and directors of the entity.
- Coordinated self-insured plan payments for restructured entity with 5,000 employees in several geographic locations.
- Represented union in transportation industry in connection with reduction of retiree pension benefits.