An ESOP plan sponsor must avoid conflict in fulfilling its corporate governance and fiduciary responsibilities. How is this done? This presentation discusses the dangers of wearing multiple hats and how to minimize litigation risk.
Este documento describe los pernos de anclaje y sus características. Explica que los pernos de anclaje son un tipo de sostenimiento activo que impide el colapso de rocas mediante el anclaje de barras de acero en taladros. Luego detalla dos métodos de anclaje (formación de una viga monolítica y formación de una zona de compresión) y los pasos para la instalación correcta de pernos, incluida la perforación, introducción y tensado.
Parametros Geotecnicos y Estabilidad de TaludesGianfrancoAlva1
Este documento trata sobre parámetros geotécnicos y estabilidad de taludes en canteras. Explica conceptos clave como porosidad, densidad, resistencia a la compresión y capacidad de carga portante del terreno, e identifica cómo estas propiedades afectan la estabilidad de taludes. También describe la influencia de las características estructurales como orientación, espaciado y grado de fracturación de las rocas en la excavación.
2 estimacion geoestadistica e jara codelcoKEVIN URIEPERO
Este documento describe diferentes métodos de estimación de recursos mineros, incluyendo estimación global, estimación local, método de la media aritmética, polígonos, inverso de la distancia, y geoestadística. La geoestadística utiliza funciones aleatorias y el modelo del variograma para proveer estimaciones con errores asociados, dando mayor peso a muestras cercanas. El krigeado busca la mejor estimación lineal minimizando la varianza.
Este documento describe los pernos de anclaje y sus características. Explica que los pernos de anclaje son un tipo de sostenimiento activo que impide el colapso de rocas mediante el anclaje de barras de acero en taladros. Luego detalla dos métodos de anclaje (formación de una viga monolítica y formación de una zona de compresión) y los pasos para la instalación correcta de pernos, incluida la perforación, introducción y tensado.
Parametros Geotecnicos y Estabilidad de TaludesGianfrancoAlva1
Este documento trata sobre parámetros geotécnicos y estabilidad de taludes en canteras. Explica conceptos clave como porosidad, densidad, resistencia a la compresión y capacidad de carga portante del terreno, e identifica cómo estas propiedades afectan la estabilidad de taludes. También describe la influencia de las características estructurales como orientación, espaciado y grado de fracturación de las rocas en la excavación.
2 estimacion geoestadistica e jara codelcoKEVIN URIEPERO
Este documento describe diferentes métodos de estimación de recursos mineros, incluyendo estimación global, estimación local, método de la media aritmética, polígonos, inverso de la distancia, y geoestadística. La geoestadística utiliza funciones aleatorias y el modelo del variograma para proveer estimaciones con errores asociados, dando mayor peso a muestras cercanas. El krigeado busca la mejor estimación lineal minimizando la varianza.
Este documento presenta información sobre parámetros geotécnicos y estabilidad de taludes en canteras. Explica conceptos clave como porosidad, densidad, resistencia a la compresión y cómo estas propiedades afectan la estabilidad de taludes. También cubre temas como causas de desestabilización, modos de rotura e influencia de características estructurales de la roca. El objetivo es proporcionar una introducción a estos temas importantes para el diseño seguro de taludes en operaciones de canteras.
Java 女子部 講義資料
https://javajo.doorkeeper.jp/events/21337
This presentation is used to lecture about the introduction of Java Virtual Machine at Java Japan User Group (Girls).
- An ESOP (Employee Stock Ownership Plan) is a type of defined contribution retirement plan that allows employees to become owners of company stock.
- An ESOP trust is established to purchase shares of company stock from the company or existing shareholders. The trust may borrow funds for purchases.
- As the loan is repaid by company contributions, shares are allocated to employee accounts. Upon leaving the company, shares may be distributed or cashed out to employees.
- Setting up an ESOP provides advantages for selling shareholders, such as tax deferral, and for employees by allowing them to build wealth through company ownership. However, ESOPs have complex legal requirements and fiduciary obligations under ERISA.
Buying or Selling an ESOP-Owned Company: How to Execute a Successful Transaction. The presentation includes a recent case study of the sale of a large ESOP-owned company, discussion of intricacies involved related to an ESOP, and how to execute a successful transaction.
ESOP Participants and Shareholder RightsSES Advisors
This chapter discusses the rights of ESOP participants as shareholders. It begins by explaining that ESOPs allow employees to feel like owners through stock ownership, but the legal ownership rests with trustees. ESOP participant rights are governed by ERISA, while shareholder rights come from state corporate law. It then summarizes some typical shareholder rights like voting, financial disclosures, dissenting from major decisions. For ESOPs, the trustee has authority over unallocated shares but must allow participants to direct voting of allocated shares, if decisions are made freely and without pressure. The trustee still has responsibility to ensure directions follow fiduciary duties.
This document contains a series of questions and answers about thumbs, business models, and environmental ventures. It discusses how thumbs allow humans to make and do things. It provides details about the author's background and experience in entrepreneurship and venture capital focused on environmental and social causes. The document discusses the lean startup methodology and business model canvas for developing new ideas. It provides the example of Envirofit International, a company developing affordable clean cooking technologies. It encourages the reader to learn more about business models and designing ideas for survival and replication through various resources and frameworks.
Being A Board Member of an ESOP CompanyPaul Hudnut
A presentation to the National Center for Employee Ownership (NCEO) session on boards and governance based on my experience as an independent board member at New Belgium Brewing Co.
FEMA Provisions on ESOP : Presentation by CA. Sudha G. Bhushan TAXPERT PROFESSIONALS
The document discusses an employee stock option plan (ESOP) for an Indian company. It provides details on the regulations around issuing ESOPs to foreign employees under the Foreign Exchange Management Act. An Indian company can issue shares to employees of its foreign joint ventures or subsidiaries, subject to certain conditions like the value of shares not exceeding 5% of the company's paid-up capital. The tax treatment of ESOPS in India and accounting standards under IFRS are also summarized.
ESOP Guardian is a web-based application developed by Corporate Professionals eSolutions to manage all aspects of Employee Stock Option Plans (ESOPs) for companies. It provides separate interfaces for companies, employees, accounts teams, and ESOP trusts. The application automates complex ESOP calculations, provides real-time access and reports to help companies and employees manage multiple ESOP schemes for any number of employees in a centralized, paperless manner compliant with all regulations. Key features include automatic alerts, flexible customization, and data security options. Corporate Professionals eSolutions offers implementation and support services to help companies fully outsource or self-manage their ESOP programs using the ESOP Guardian application.
The document outlines provisions for issuing sweat equity shares and employee stock option plans (ESOPs) for unlisted companies under the new Indian Companies Act. It defines eligible employees, allows up to 15% of equity shares per year to be issued as sweat equity at a price determined by a registered valuer. Companies have flexibility to set exercise prices and vesting periods for ESOPs. It provides disclosure requirements for directors' reports and registers that must be maintained for sweat equity shares and ESOPs.
An ESOP (employee stock ownership plan) is primarily used as a talent retention tool, incentive, or remuneration for employees apart from sharing wealth more broadly. Previously, private and unlisted public companies had flexibility to structure ESOPs for employees. However, the Companies Act 2013 now makes ESOP rules more prescriptive, specifying eligibility of employees/promoters, vesting periods, and other details. Companies with existing ESOPs that require modification should do so carefully as the new rules apply prospectively.
ESOPS for Startups by Ms. Neela Badami Kesava Reddy
This document summarizes the legal aspects of employee stock option plans (ESOPs) for start-ups in India. It discusses the impact of the new Companies Act of 2013 on ESOPs, including exclusions of promoters from eligible employees. It also covers Securities and Exchange Board of India and Reserve Bank of India regulations, tax implications, required documentation, and corporate compliance procedures such as shareholder resolutions and disclosures. The presentation provides an overview of key definitions, rules around pricing, vesting, transfers and more for establishing legally compliant ESOP schemes for private companies in India.
- The document discusses Skype's equity incentive plan to enable employees to share in the company's future value appreciation and align their interests with shareholders. The plan includes new option grants at closing with time-based and performance-based vesting linked to investor return thresholds.
- Individual grants will vary based on factors like seniority, impact, performance potential. Compared to public company RSUs, the Skype plan offers higher upside potential but less liquidity in the short term and value directly tied to company performance.
- Next steps include distributing individual grant letters before year's end and follow up information sessions to explain the plan in early 2010.
Este documento presenta información sobre parámetros geotécnicos y estabilidad de taludes en canteras. Explica conceptos clave como porosidad, densidad, resistencia a la compresión y cómo estas propiedades afectan la estabilidad de taludes. También cubre temas como causas de desestabilización, modos de rotura e influencia de características estructurales de la roca. El objetivo es proporcionar una introducción a estos temas importantes para el diseño seguro de taludes en operaciones de canteras.
Java 女子部 講義資料
https://javajo.doorkeeper.jp/events/21337
This presentation is used to lecture about the introduction of Java Virtual Machine at Java Japan User Group (Girls).
- An ESOP (Employee Stock Ownership Plan) is a type of defined contribution retirement plan that allows employees to become owners of company stock.
- An ESOP trust is established to purchase shares of company stock from the company or existing shareholders. The trust may borrow funds for purchases.
- As the loan is repaid by company contributions, shares are allocated to employee accounts. Upon leaving the company, shares may be distributed or cashed out to employees.
- Setting up an ESOP provides advantages for selling shareholders, such as tax deferral, and for employees by allowing them to build wealth through company ownership. However, ESOPs have complex legal requirements and fiduciary obligations under ERISA.
Buying or Selling an ESOP-Owned Company: How to Execute a Successful Transaction. The presentation includes a recent case study of the sale of a large ESOP-owned company, discussion of intricacies involved related to an ESOP, and how to execute a successful transaction.
ESOP Participants and Shareholder RightsSES Advisors
This chapter discusses the rights of ESOP participants as shareholders. It begins by explaining that ESOPs allow employees to feel like owners through stock ownership, but the legal ownership rests with trustees. ESOP participant rights are governed by ERISA, while shareholder rights come from state corporate law. It then summarizes some typical shareholder rights like voting, financial disclosures, dissenting from major decisions. For ESOPs, the trustee has authority over unallocated shares but must allow participants to direct voting of allocated shares, if decisions are made freely and without pressure. The trustee still has responsibility to ensure directions follow fiduciary duties.
This document contains a series of questions and answers about thumbs, business models, and environmental ventures. It discusses how thumbs allow humans to make and do things. It provides details about the author's background and experience in entrepreneurship and venture capital focused on environmental and social causes. The document discusses the lean startup methodology and business model canvas for developing new ideas. It provides the example of Envirofit International, a company developing affordable clean cooking technologies. It encourages the reader to learn more about business models and designing ideas for survival and replication through various resources and frameworks.
Being A Board Member of an ESOP CompanyPaul Hudnut
A presentation to the National Center for Employee Ownership (NCEO) session on boards and governance based on my experience as an independent board member at New Belgium Brewing Co.
FEMA Provisions on ESOP : Presentation by CA. Sudha G. Bhushan TAXPERT PROFESSIONALS
The document discusses an employee stock option plan (ESOP) for an Indian company. It provides details on the regulations around issuing ESOPs to foreign employees under the Foreign Exchange Management Act. An Indian company can issue shares to employees of its foreign joint ventures or subsidiaries, subject to certain conditions like the value of shares not exceeding 5% of the company's paid-up capital. The tax treatment of ESOPS in India and accounting standards under IFRS are also summarized.
ESOP Guardian is a web-based application developed by Corporate Professionals eSolutions to manage all aspects of Employee Stock Option Plans (ESOPs) for companies. It provides separate interfaces for companies, employees, accounts teams, and ESOP trusts. The application automates complex ESOP calculations, provides real-time access and reports to help companies and employees manage multiple ESOP schemes for any number of employees in a centralized, paperless manner compliant with all regulations. Key features include automatic alerts, flexible customization, and data security options. Corporate Professionals eSolutions offers implementation and support services to help companies fully outsource or self-manage their ESOP programs using the ESOP Guardian application.
The document outlines provisions for issuing sweat equity shares and employee stock option plans (ESOPs) for unlisted companies under the new Indian Companies Act. It defines eligible employees, allows up to 15% of equity shares per year to be issued as sweat equity at a price determined by a registered valuer. Companies have flexibility to set exercise prices and vesting periods for ESOPs. It provides disclosure requirements for directors' reports and registers that must be maintained for sweat equity shares and ESOPs.
An ESOP (employee stock ownership plan) is primarily used as a talent retention tool, incentive, or remuneration for employees apart from sharing wealth more broadly. Previously, private and unlisted public companies had flexibility to structure ESOPs for employees. However, the Companies Act 2013 now makes ESOP rules more prescriptive, specifying eligibility of employees/promoters, vesting periods, and other details. Companies with existing ESOPs that require modification should do so carefully as the new rules apply prospectively.
ESOPS for Startups by Ms. Neela Badami Kesava Reddy
This document summarizes the legal aspects of employee stock option plans (ESOPs) for start-ups in India. It discusses the impact of the new Companies Act of 2013 on ESOPs, including exclusions of promoters from eligible employees. It also covers Securities and Exchange Board of India and Reserve Bank of India regulations, tax implications, required documentation, and corporate compliance procedures such as shareholder resolutions and disclosures. The presentation provides an overview of key definitions, rules around pricing, vesting, transfers and more for establishing legally compliant ESOP schemes for private companies in India.
- The document discusses Skype's equity incentive plan to enable employees to share in the company's future value appreciation and align their interests with shareholders. The plan includes new option grants at closing with time-based and performance-based vesting linked to investor return thresholds.
- Individual grants will vary based on factors like seniority, impact, performance potential. Compared to public company RSUs, the Skype plan offers higher upside potential but less liquidity in the short term and value directly tied to company performance.
- Next steps include distributing individual grant letters before year's end and follow up information sessions to explain the plan in early 2010.
This document discusses employee stock option plans (ESOPs) in India. It provides definitions of ESOPs and outlines their objectives to motivate employees and improve shareholder value. It discusses the applicable guidelines issued by the Securities and Exchange Board of India for listed and unlisted companies regarding accounting for employee stock options. It also covers eligibility requirements, pricing, shareholder approval process, and taxation issues related to ESOPs.
The document provides an overview of employee stock option plans (ESOPs) in India, including:
1) It describes the key aspects of ESOPs such as granting employees the right to purchase company shares in the future at a preset price, and how this can create wealth for employees as share prices appreciate over time.
2) It outlines the legal and regulatory framework for ESOPs in India, including guidelines from SEBI, the Companies Act, taxation rules, and accounting standards.
3) It discusses important considerations for companies in designing an ESOP scheme such as objectives, eligibility, pricing, vesting periods, and approvals required.
17 rights and_privileges_of_shareholdersMark Anders
The document discusses the rights and privileges of shareholders in a company. It outlines several key rights including the right to obtain company documents, transfer shares, attend general meetings, vote, receive dividends, inspect meeting minutes, and participate in director elections. It also discusses how strong investor protections are important for effective corporate governance and can help reduce agency costs by aligning manager and shareholder objectives.
ESOP (Employee Stock Ownership Plan) allows employees to buy company stock at fair value, making them owners. Introduced in the 1950s, ESOP trusts established by companies distribute tax-deductible contributions to employee accounts. Employees must work 1 year or 1000 hours to be eligible. After 10 years and age 55, employees can diversify up to 25% of their account. While building employee ownership and retention, ESOPs also face challenges like share dilution and decreased attractiveness if stock value declines. Overall, ESOPs are seen as beneficial for rewarding, retaining, and attracting talent through ownership.
ESOPs, or employee stock option plans, allow companies to provide employees with ownership stakes and help attract, retain, and incentivize talent. The Companies Act 2013 and related rules provide the regulatory framework for ESOPs at listed and unlisted companies. Key aspects include shareholder approval, eligibility of permanent employees, and minimum vesting periods. Companies can implement ESOPs through a direct route of share allotments or a trust route involving an employee welfare trust. The document provides details on the ESOP regulatory framework and the services offered by Corporate Professionals to help companies establish and manage compliant ESOP programs.
ESOP is an Employee benefit Plan which makes the employees of a company owners of stock in that Company.
ESOP is a plan to compensate, retain and attract employees.
ESOP is a contract between a Company and its employees that give employees the right to buy a specific number of the company's shares at a fixed price within a certain period of time.
ESOP is a step ahead to encourage, motivate and retain the existing employees in the company. Human resource is the most valuable asset for any company, which makes it important to have a idea about the incentive plans. This presentation focuses on one such area i.e. issue of ESOPs by companies in India.
The GreatBanc Trust Settlement Agreement outlines guidelines for fiduciaries to follow in ESOP transactions involving non-public stock. It emphasizes the importance of the valuation advisor's independence and qualifications. The fiduciary is responsible for determining fair market value through a prudent investigation, considering all relevant information like financial projections. Projections are a key part of valuation but the fiduciary must test their reasonableness and understand how the advisor incorporates them.
Published 2004 in the Journal of Employee Ownership Law and Finance
Co-authored by Jim Steiker, this article reviews the legal standards that govern ESOP committees.
The Supreme Court’s Decision in Dudenhoeffer: If You Offer a Company Stock Fu...Winston & Strawn LLP
The U.S. Supreme Court’s decision in July in Fifth Third Bancorp v. Dudenhoeffer has opened the door for a resurgence in litigation against the officers, directors, and 401(k) plan fiduciaries of public companies that make available a Company Stock Fund investment option in their 401(k) plans or maintain an employee stock ownership plan (ESOP). Securities fraud class actions against officers and directors almost always follow a significant drop in a company’s stock price. A little over a decade ago, the plaintiffs’ class action bar began suing ERISA plan fiduciaries, which nearly always included officers and directors, for breach of their fiduciary duty of prudence in investing such plans when the company’s stock price declined. Eventually, all but one of the federal appellate courts adopted the so-called “Moench presumption” (essentially, a presumption of prudence) in favor of the plan fiduciaries and these sorts of case foundered. Dudenhoeffer expressly rejects the Moench presumption, opening the way for plaintiffs to restart their earlier lawsuits and begin new ones. That said, the decision also provides meaningful guideposts for how companies might effectively inoculate against such claims.
The document discusses the doctrines of constructive notice and indoor management as they relate to company law. It provides definitions and examples of each doctrine.
Constructive notice means that any person dealing with a company has a duty to inspect the company's Memorandum and Articles of Association, which are public documents registered with the Registrar of Companies. This protects companies from claims by outsiders who argue they were unaware of restrictions in the documents. Indoor management, also known as Turquand's Rule, protects outsiders by presuming their transactions with a company are valid even if internal procedures were not properly followed, unless the outsider had explicit knowledge of irregularities. The document analyzes several court cases to illustrate exceptions and differences
This document discusses the powers, duties and liabilities of directors and officers. It outlines that directors have the power to manage the business but can delegate some powers. It also discusses the fiduciary duty of directors to act in good faith in the best interests of the company. Directors have a duty of care to act with prudence. The business judgment rule protects directors from liability for reasonable business decisions. The document provides strategies for directors such as obtaining proper approvals, managing conflicts of interest and purchasing insurance. It also presents two case studies on improper accounting practices and taking a corporate opportunity.
This document discusses the powers, duties and liabilities of directors and officers. It outlines that directors have the power to manage the business but can delegate some powers. It also discusses the fiduciary duty of directors to act in good faith in the best interests of the company. Directors have a duty of care to act with prudence. The business judgment rule protects directors from liability for reasonable business decisions. The document provides strategies for directors such as obtaining proper approvals, managing conflicts of interest and purchasing insurance. It also presents two case studies on improper accounting and taking a corporate opportunity.
HunterMaclean ERISA and employee benefits attorney Rebecca Sczepanski made this presentation at the 2015 Savannah Fiduciary Seminar. Her presentation covered a summary of the legal issues regarding fiduciary status, including how to identify ERISA and state law fiduciaries. She provided tips for avoiding or mitigating risks associated with defined plan fiduciary status as well as an update on major fiduciary litigation.
External Linits on ESOPs Special Considerations for Professional Corporations...Christopher T. Horner II
This document provides an overview of legal considerations for leveraged ESOP transactions involving professional corporations across several states. It summarizes state laws governing share ownership in professional corporations from Virginia, Maryland, North Carolina, and South Carolina. Key takeaways are that professional corporations can sponsor ESOPs in these states but state laws restrict share ownership to licensed professionals. The document also outlines the basic structure of a leveraged ESOP transaction and relevant ERISA and tax code provisions.
Igor Ellyn, QC, CS is a leading Toronto litigation lawyer, chartered arbitrator and mediator, who specializes in shareholders disputes and arbitration. In this highly informative presentation, Mr. Ellyn discusses litigation and arbitration of shareholder oppression cases.
Njscpa 2011 fiduciary responsibilities and riskMark Mensack
The correct answer is B. There are typically hundreds of pages of documents that would need to be reviewed to understand all the fees, compensation, and potential conflicts of interest involved in a retirement plan. Full transparency and disclosure of all relevant information is very challenging.
This document defines key terms related to directors' duties and discusses various duties of directors under common law, statutory law, and PRC law. It outlines duties of care and skill, fiduciary duties, conflicts of interest, duty to act in the company's interests, and more. It also discusses shadow directors, de facto directors, and nominee directors. The duties apply differently to executive vs non-executive directors. Breach of duties can lead to civil liability. PRC law also establishes directors' duties to the state and various stakeholders.
The document discusses the legal issues surrounding corporate liquidation. It provides an overview of the different reasons a company may enter liquidation, either voluntarily through shareholder or director resolution, or involuntarily through a court order obtained by creditors. It also outlines the roles and responsibilities of directors, shareholders, secured and unsecured creditors during the liquidation process. Key points covered include tests for insolvency, director liability for insolvent trading, and the order of creditor payment during liquidation. The document is relevant as it analyzes the legal implications of the liquidation of Best Dressed Homes Ltd.
Small and medium sized businesses are the engines which drive the North American economy. Increasingly, people go in to their own business. Often spouses and other family members are in business together. Because of mutual trust and sharing which exists at the start of these arrangements, spouses tend not to make agrements about what will happen if the marriage breaks down.
When spouses who are in business together divorce, there are also consequences for the business. Who will keep the business? What will the spouses be able to work together? How much is the business worth? Who should buy the business? How will a buyout be funded? These questions are just the tip of the iceberg.
In this PowerPoint slide presentation, we provide useful information about the legal problems confronting separating or divorcing couples who are in business together. By reviewing these slides you will gain important insights about the issues lawyers have to deal with in these situations. What law applies? What other kinds of experts do you need? What legal advice will you need to find a workable resolution? What evidence will you need if the case has to go to trial? What procedure must be followed? If you are in business with your spouse or life partner, the information in these slides provides a few pointers about Ontario law even if the relationship is continuing. Sometimes, a unanimous shareholders’ agreement or some strategic advice can help avoid expensive litigation down the road.
These slides were part of a presentation at a lawyers conference conducted by Osgoode Professional Development in Toronto on March 27, 2012. They are intended as information only and not legal advice.
The authors are experienced litigation and arbitration lawyers in Toronto, Ontario, Canada, who act on complex shareholder disputes, typically involving closely-held corporations.
1. Trustees and directors of privately held companies have differing fiduciary duties: trustees must avoid conflicts of interest and act personally for beneficiaries, while directors must act in the best interests of the corporation.
2. When trustees exercise shareholder powers like voting shares, they must use that power in the best interests of beneficiaries, but as directors they represent the corporation.
3. Trustees have a duty to disclose corporate information to beneficiaries, but as directors they also have a duty of confidentiality to the corporation, and corporate confidentiality takes priority. Determining which "hat" trustees are wearing and whose interests they represent can be complex.
Lunch and Learn - Director's Duties and LiabilitiesMaple Leaf Angels
This document provides an overview of directors' roles, responsibilities, and potential liabilities under corporate law. It discusses the fundamental duties of directors including the duty to manage, fiduciary duties of care and loyalty, and corresponding responsibilities and liabilities. The duties of directors are established under corporate statutes and include managing the business, acting honestly and in good faith, avoiding conflicts of interest, and exercising due care and skill. Maintaining proper governance processes can help directors meet their standard of care.
This document summarizes a presentation on successor and alter-ego liability. It discusses the general rule that an asset purchaser is not liable for a seller's debts, but outlines four exceptions: express or implied agreement, de facto merger, mere continuation, and fraud. It defines factors courts examine for de facto mergers and mere continuations. It also covers piercing the corporate veil and fraudulent transfer claims. The presentation aims to explain where risks can arise in mergers and acquisitions regarding successor liability, veil piercing, and fraudulent transfers.
This document provides an overview of corporation accounting, including:
1) It discusses the process of forming a corporation through incorporation and securing equity financing through the issuance of stock. Some key advantages and disadvantages of the corporate form are outlined.
2) It covers different financing options like debt versus equity, and how stocks work on private and public corporations. The roles of common stock and preferred stock are defined.
3) Key terms related to stock like authorized shares, issued shares, outstanding shares, and treasury stock are explained.
PMF Legal is a Sydney-based commercial law firm specializing in corporate and commercial law, with expertise in areas like insolvency and restructuring. The firm has a strong track record of successful outcomes for clients and has contributed to changes in legislation through landmark court cases. Led by principal Paul Fordyce, an experienced insolvency specialist, PMF Legal provides innovative, tailored legal advice to meet each client's unique needs.
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This presentation addresses the current status of the FLSA overtime rules and CEO pay ratio rules and includes specific recommendations for HR personnel.
This document provides an overview of corporate governance risks and best practices for companies with employee stock ownership plans (ESOPs). It discusses the roles and responsibilities of various parties like shareholders, boards of directors, management, ESOP trustees, and ESOP committees. It also explores the intersection of corporate and ERISA fiduciary duties, particularly regarding executive compensation and corporate transactions. The presentation aims to help attendees understand governance issues that can lead to litigation and ways to reduce conflicts between corporate and ESOP interests.
This document discusses executive compensation trends in 2015. It begins by introducing Daniel Janich of Greensfelder, Hemker & Gale law firm and the topic of why executive compensation is important. The main points covered include different types of executive compensation such as base salary, bonuses, equity awards and benefits. It also discusses applicable laws around executive compensation and current trends, such as greater transparency and performance-based compensation.
The Valuation Report Checklist: What Should ESOP Trustees Be Looking For?Daniel Janich
An ESOP plan trustee must ascertain annually the fair market value of plan shares. This is a fiduciary responsibility carried out by obtaining a valuation report from a qualified appraiser and ensuring the accuracy and completeness of this report before it is used. These slides are from an NCEO presentation in April 2015 that addresses what the trustee should be looking for when the appraiser submits his or her annual valuation report.
This presentation addresses employee benefit plan exposure arising from employer use of a contingent workforce. Included is a discussion of employer liability arising from use of independent contractors to avoid or minimize ACA's "play or pay" coverage requirements.
Equity Incentives for Limited Liability CompaniesDaniel Janich
This slide presentation reviews the options available to limited liability companies in providing equity incentives to their employees, and how limited liability companies should develop a program for maximum effectiveness. This presentation was given at the NCEO Annual Conference in Atlanta April 9, 2014.
The document discusses various forms of equity compensation that LLCs can use to attract, incentivize, and reward employees, including capital interests, profits interests, options, and phantom equity. It outlines the key advantages and disadvantages of equity compensation, as well as the tax treatment and implications for both employees and the LLC for each type of equity interest.
Daniel Janich presented on forms of executive compensation for privately-held companies. Executive compensation has grown more complex due to regulations like Sarbanes-Oxley, Section 409A, and securities laws. Privately-held companies need experienced advisors and a compensation philosophy when determining compensation. Components of compensation include salary, bonuses, deferred compensation, equity incentives, and benefits. Equity plans for S corporations require special consideration of Section 409(p)'s rules regarding disqualified individuals and nonallocation years.
Integrating Advocacy and Legal Tactics to Tackle Online Consumer Complaintsseoglobal20
Our company bridges the gap between registered users and experienced advocates, offering a user-friendly online platform for seamless interaction. This platform empowers users to voice their grievances, particularly regarding online consumer issues. We streamline support by utilizing our team of expert advocates to provide consultancy services and initiate appropriate legal actions.
Our Online Consumer Legal Forum offers comprehensive guidance to individuals and businesses facing consumer complaints. With a dedicated team, round-the-clock support, and efficient complaint management, we are the preferred solution for addressing consumer grievances.
Our intuitive online interface allows individuals to register complaints, seek legal advice, and pursue justice conveniently. Users can submit complaints via mobile devices and send legal notices to companies directly through our portal.
Safeguarding Against Financial Crime: AML Compliance Regulations DemystifiedPROF. PAUL ALLIEU KAMARA
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Presentation slides for a session held on June 4, 2024, at Kyoto University. This presentation is based on the presenter’s recent paper, coauthored with Hwang Lee, Professor, Korea University, with the same title, published in the Journal of Business Administration & Law, Volume 34, No. 2 (April 2024). The paper, written in Korean, is available at <https://shorturl.at/GCWcI>.
Business law for the students of undergraduate level. The presentation contains the summary of all the chapters under the syllabus of State University, Contract Act, Sale of Goods Act, Negotiable Instrument Act, Partnership Act, Limited Liability Act, Consumer Protection Act.
1. Daniel N. Janich Robert Rachal Kevin Kolb
ESOP Fiduciary Duties &
Corporate Governance:
Compliance & Litigation Perspectives
April 14, 2016
Presented by:
2. Presentation Goals
• Understanding Corporate
Governance Risks in ESOP Owned
Companies
• Learn Best Practices to Reduce
Litigation & Increase Business
Success
• Explore Ways to Manage Potential
Corporate Governance vs. ESOP
Administration Conflicts
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3. What Do We Mean By Corporate
Governance?
• Allocation of duties among
shareholders, BOD & management
to achieve continued company
growth and success
• Subject to state corporate law and
corporate bylaws
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4. Roles of Company Players
• Shareholders: elects BOD; vote on
extraordinary corporate matters
• BOD: hires and evaluates
management; appoints ESOP
trustee; makes strategic business
decisions
• Management: runs day-to-day
company operations
• Governed by State Corporate Law
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5. Additional Corporate Governance in
ESOP Companies
• Two additional governance layers
ESOP Trustee(s)
BOD’s ESOP Committee
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6. Role of ESOP Trustee
• Governed by ERISA Law
• Overriding Duty to Protect Interests
of ESOP Participants & Beneficiaries
• Represents Participants and
Beneficiaries by virtue of
shareholder status
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7. Role of BOD’s ESOP Committee
• Governed by Corporate Law &
ERISA Law
• Adopt, Amend or Terminate ESOP
Plan
• Determine Company Contributions
to ESOP
• Oversee ESOP Plan Administration;
Appoint Trustee(s)
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8. Corporate Governance Standards
• BOD must act in “good faith”
exercising reasonable care
• Business Judgment Rule (gross
negligence standard of review)
• BOD & Management must act in best
interest of corporation and its
shareholders, not solely in self-
interest (duty of loyalty)
• Do Corporate Employees also have
ESOP responsibilities?
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9. ERISA Fiduciary Standards
• Applicable to ESOP Plan
Administration
• Fiduciaries must act with “highest
standards of prudence, skill, care”
and solely in interest of plan
participants
• Fiduciary standard (highest level
of care standard of review)
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10. ERISA Fiduciary Duties
• Duty of Prudence: Act with care,
skill, prudence and diligence of
Prudent Person in like
circumstances
• Duty of Loyalty/Exclusive Purpose:
Act exclusively in the interest of
plan participants and beneficiaries
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11. ERISA Fiduciary Duties (cont’d)
• Follow Plan Documents provided
they are consistent with ERISA
• Protect Plan from Non-Exempt
Prohibited Transactions by
Inadvertent Conflict of Interest
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12. Who Is An ERISA Fiduciary?
• Who Does the Plan or Trust Identify
as Fiduciary?
• Fiduciary is anyone who exercises
discretionary authority & control over
management or disposition of plan
assets. ERISA §3(21)(A). Includes
Plan Administrator and Trustee
• Trustee may be “directed &
independent” or “corporate insider”
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13. The Plan Administrator:
ESOP Fiduciary’s Primary
Responsibilities
• ERISA Compliance To Ensure Tax-
Exempt Status
• Administer ESOP Fairly
• Is the Plan Administrator also a
Corporate Employee?
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14. Trustee: ESOP Fiduciary’s Primary
Responsibilities
• Shareholder representative who elects
BOD & votes shares
• Pass Through Voting by Law or Plan
• Monitor corporate management and BOD
to ensure no harm to ESOP plan
participants’ interests
• Stock Valuation
• Due Diligence for Hire of Outside
Advisors
• Is the Trustee also a Corporate
Employee?
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15. The Danger of Wearing Multiple
Hats
• Settlor v. Fiduciary Functions
• When Corporate Decision Conflicts
With Fiduciary Responsibilities
• Conflicts Arise Between
• Company/ESOP
• BOD/ESOP
• Management & ESOP
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17. The basic structure: Grindstaff v. Green approved
ESOP structure in which ESOP trustees and
company directors appoint each other.
• Does that create enhanced duties on ESOP trustees to
protect interests of participants?
Hot topic issues creating blurred lines:
• Executive compensation – when does it become an
ERISA fiduciary issue for the ESOP trustees?
• Husvar v. Rapoport and Eckelkamp v. Beste – courts
deferring to plaintiffs’ choice of claim and forum.
• Johnson v. Couturier – protecting ESOP from self-dealing in
corporate pay.
Fiduciary & Corporate Governance- Litigation
Examples
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18. Hot topic issues creating blurred lines (cont):
• Corporate events impacting ERISA fiduciary duties:
Armstrong v. LaSalle Bank and corporate merger’s impact
on stock valuation and repurchase obligations.
• Breakdown of roles in ESOP acquisitions: Perez v.
Bruister as a cautionary tale.
• Fraud or malfeasance: Canale v. Yegan and ERISA
trustee’s need to bring derivative action to protect the
company.
Fiduciary & Corporate Governance- Litigation
Examples
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19. • ESOP had a common structure in which the board selected and
controlled the ESOP that then elected the directors pursuant to a
board committee’s recommendation.
• Union struck over acquiring “pass through” voting rights so that each
participant could vote for directors, but lost.
• Court rejected the various challenges to the ESOP’s refusal to
implement “pass through” voting:
• Management entrenchment is a common and known feature of ESOPs,
and Congress has not seen fit to upset this.
• Contrary to the DOL’s claim, voting in regular board elections is not a
“plan asset.”
• Amending the ESOP plan to add “pass through” voting is settlor, not
fiduciary conduct.
Query: Does management entrenchment create enhanced
duties on ESOP trustees to protect the interests of participants?
Grindstaff v. Green, 133 F.3d 416 (6th Cir. 1998).
Approving Board Self-Perpetuation and Control of
ESOP
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20. • In theory the normal operation of a business is typically a corporate,
not ERISA, function subject to corporate fiduciary duties.
• For corporate fiduciary duties the standards and burdens, e.g., the
“business judgment rule,” illustrate court’s general unwillingness to
interfere with or second-guess business decisions.
• In an ESOP, however, executive compensation can sometimes be a
fraught area. Employee-participants may resent the pay of senior
executives, while entrenchment and control of the ESOP can lead
to claims of self-dealing.
• Husvar v. Rapoport and Eckelkamp v. Beste suggest a plaintiff can bring
claims under either state corporate law or ERISA fiduciary law.
• Johnson v. Couturier illustrates the ERISA exposures if a court
concludes executive compensation rose to the level of self-dealing.
Executive Compensation in an ESOP: A
Corporate or ERISA Fiduciary Duty – or Perhaps
Both?
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21. • Husvar v. Rapoport , 430 F.3d 777 (6th Cir. 2005) –
executive compensation as corporate fiduciary
duty:
• ESOP participants alleged breach of corporate fiduciary
duties when the company’s executives granted
themselves substantial compensation even though the
company was not doing well financially.
• Court found plaintiffs did not plead an ERISA claim – they
instead challenged business decisions made by the
company’s directors.
Executive Compensation in an ESOP: A
Corporate or ERISA Fiduciary Duty – or Perhaps
Both?
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22. • Compare Eckelkamp v. Beste, 315 F.3d 863 (8th
Cir. 2002) – executive compensation can trigger
ERISA fiduciary duties:
• Defendants were both ESOP trustees and corporate
officers. Plaintiffs claimed they breached their ERISA
fiduciary duties by overcompensating themselves.
• Court rejected ERISA claim on the merits: Company was
extraordinarily successful ,and critique of their
compensation failed to factor this in.
• State law derivative claim was also preempted by ERISA:
• Same facts, same parties, seeking same relief as ERISA
fiduciary claim. Allowing participants to assert rights granted
to ESOP trustees would alter plan administration.
Executive Compensation in an ESOP: A
Corporate or ERISA Fiduciary Duty – or Perhaps
Both?
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23. • Former president, and in-house and outside
counsel were both corporate directors and ESOP
trustees.
• Over a period of several years outside counsel created
several very generous executive compensation plans for
the president.
• Pursuant to a merger of the ESOP-owned company into a
shell company, the president received a buy-out valued at
$35 million, or what appears to be about two-thirds of the
value of the ESOP-owned company.
Executive Compensation in an ESOP: Johnson v. Couturier, 572
F.3d 1067 (9th Cir. 2009) & ERISA Exposures From Claims of
Self-Dealing
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24. • Court noted difficulty in distinguishing between
corporate and ERISA fiduciary roles in the area of
executive compensation.
• Held it was appropriate to impose ERISA fiduciary duties
on transactions in which the individual could self-deal at
the expense of the ESOP.
• Court enforced preliminary injunction (i) freezing
former president’s assets and (ii) barring the
ESOP-owned company from advancing anyone’s
defense costs.
• Found it likely that fiduciary breach occurred.
• Found that company’s assets were effectively ESOP
assets.
Executive Compensation in an ESOP: Johnson v. Couturier, 572
F.3d 1067 (9th Cir. 2009) & ERISA Exposures From Claims of
Self-Dealing
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25. • Amsted Industries cashed out its participants at once when
they left the plan. Valuation was as of September 30th and
was locked in for nine months, up to June 30th.
• Court believed Amsted may have been primed for a run on
redemptions:
• Recently acquired a similar sized company with $800 million in
debt.
• 800 employees were at least 55 years old and held $300 million
in ESOP stock.
• Stock market in general was falling.
• Amsted’s trustee set redemption price at $184 for 2000, had
32% redemptions instead of prior rates of around 10%.
• Created liquidity problem because much of debt limit had been
used for corporate acquisition.
• Stock dropped to $90 the next year and company restricted
ESOP redemptions, now paid out over multiple years.
Armstrong v. LaSalle, 446 F. 3d 728 (7th Cir. 2006)
Corporate Events & ERISA Fiduciary Duties
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26. • Court said it would give deference to the ESOP trustee’s
setting of the stock’s redemption price, but required proof
that the trustee actually exercised its discretion by
considering the risk of a run on the ESOP.
• Suggested that lowering redemption price to reflect marketability
discounts would have dampened redemptions.
Court noted that inherent risk of ESOPs may require a more
watchful eye by ESOP trustees to lower risk where they can.
Query: Amsted has professional outside directors. But what
happens with an insular board? Does this same heightened
analysis apply when an insular structure for board and trustees
creates the risk of conflicts between managers and the ESOP
owners?
Armstrong v. LaSalle, 446 F. 3d 728 (7th Cir. 2006)
Corporate Events & ERISA Fiduciary Duties
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27. • ESOP acquired 100% of the company (a DirecTV installer) from the
founder (Bruister) in multiple transactions over several years.
Bruister, his employee, and his outside CPA served as the ESOP
trustees.
• Judge Jordan found Bruister to be a fiduciary, and thus on both
sides of the transactions, for the sales:
• Although Bruister abstained from voting, he did not abstain from the
process, e.g., he attended trustee meetings and gave his opinions to his
employee and his CPA.
• Bruister had undue influence over his employee, and Bruister was a
friend and major client of the CPA.
• Bruister’s attorney had substantial influence over the nominally
independent valuator, who was supposed to be working for the ESOP.
Perez v. Bruister, 54 F. Supp. 2d 629 (S.D. Miss. 2014)
Breakdown of Roles in an ESOP Acquisition
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28. • Judge Jordan also found that the valuator was not
independent:
• The valuator had offered to cut his appraisal fee if Bruister first
retained him to do a feasibility study. Even Bruister’s expert
conceded that would impact his independence.
• The valuator was eager to please the seller’s attorney, including
discussing providing future work for him. He also regularly
emailed Bruister to tout the advantages of an ESOP transaction.
• The valuator shared drafts exclusively with Bruister and his
attorney, and raised his valuations based on their input.
Perez v. Bruister, 54 F. Supp. 2d 629 (S.D. Miss. 2014)
Breakdown of Roles in an ESOP Acquisition
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29. • Judge Jordan’s telling comments:
“The duty of loyalty was breached from start to finish. The initial
structure of the ESOT provided three trustees—Bruister and two
individuals loyal to him. There were no independent or
professional fiduciaries. . . .In sum, these were not arms length
transactions.”
. . .
“The Court feels compelled to say that Defendants seem like
decent people; they are certainly likable. But the ESOP and
ESOT were structured in a way that offered little protection for
participants. The ESOT board was comprised of the seller and
two lay trustees who worked for and were personally loyal to him.
None had sufficient knowledge about business valuation, and
there was no independent fiduciary (something Defendants’
expert Kaplan said he would have recommended).”
Perez v. Bruister, 54 F. Supp. 2d 629 (S.D. Miss. 2014)
Breakdown of Roles in an ESOP Acquisition
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30. • Insurance company owned by ESOP failed
because of fraud and malfeasance.
• Although corporate acts were not subject to
ERISA fiduciary duties, trustees knowledge
of their bad actions imposed a duty on
them to act to protect the ESOP:
• E.g., they should have brought a derivative
action on behalf of the ESOP as
shareholder.
Canale v. Yegen, 782 F. Supp. 963 (D.N.J. 1992)
ESOP Trustees Need To Protect from Fraud and Malfeasance
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31. • When the matter is “pressure tested” in litigation,
courts are going to expect high standards from
ESOP trustees.
• Courts are often skeptical of trustee action and
judgment when conflicts are present.
• Courts expect to see evidence the trustee acted in
ESOP’s interests, not management’s or own interests.
• Independent professional trustee can be very helpful to
ameliorate or eliminate conflicts.
• Courts also impose high standards of care and
prudence: If not have expertise, trustees need to
acquire it by retaining professional outsiders.
Some Take-Aways From the Cases
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32. • Fiduciary Duty solely to the ESOP Participants
(as retirees, not as employees)
• Appointed and monitored by the Board of
Directors (search committee, interview process,
references?)
• Elects Board of Directors
- At shareholder meeting or via shareholder consent
- Nominating Committee
- Review qualifications
• Monitor Senior Management
ESOP Trustee
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33. • Valuation of stock held in ESOP trust
• Analysis of proposed transactions – protecting
ESOP from paying more than FMV for company
stock, or selling for less than FMV.
• Voting of ESOP shares
-Directed or Discretionary?
-How to vote unallocated or undirected
shares?
• Follow the Plan document!
Key ESOP Trustee Duties
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34. • Officer / Employee – Familiar with the Company
• Do not charge a fee
• May already have trust and respect of participants
• May not have sufficient experience with ESOPs
and related valuation or transaction issues
• Typically have full-time day job; may not have
enough time to devote to trustee duties
• Heightened level of scrutiny by DOL and the
courts
Inside Trustee
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35. • Independent from Plan Sponsor
• Expert at ESOP related issues and managing
ESOP Trust as full “daytime” job
• Lack of in-depth knowledge of Company but
possesses extensive ERISA knowledge
• Fee service
• Better positioned to protect plan sponsor from
unanticipated expense and potential substantial
liability
• CRITICAL: Should use outside trustee where
purchase offer, etc. might personally affect inside
trustee or is beyond competence of insiders
Outside Trustee
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36. • Conflicts can arise where there is overlap of
Directors, Officers and Trustees:
• Stock Valuations
• Corporate Acquisitions – Risk > Reward?
• Bona fide purchase offers
• Executive Compensation
- Compensation Committee
- Compensation Study
- Necessary to attract and retain key
management
- Excessive compensation is the problem
Potential Conflicts Involving Inside Trustees
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37. • Other Recurring Matters
- Trustee attendance at Board meetings
- Attendance at annual shareholders’ meeting
- Review of financial statements
(times of crisis)
Trustee – BOD Interaction Issues
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38. • Typically the most important trustee activity (aside
from transactions)
• Choosing Valuation Firm
-reasons for selecting
-list of those considered, and qualifications
-background check (civil/criminal)
-Independence (reports to the trustee, not the
Company or the BOD)
Annual Stock Valuation
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39. • Comprehensive Diligence Process including
meetings with management
• Confirming adequacy, accuracy &
reasonableness of company financial data
provided to valuation firm (Audit?)
• Reviewing assumptions & methodologies used by
appraiser for reasonableness (standard
approaches? consistency?)
• Document!!!
• Communication with Board of Directors and ESOP
Participants
Annual Stock Valuation (cont)
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40. • Purchases and Sales are most common
• Engage in a diligent, independent investigation
(interview management, understand business and
reasons for transaction, projections)
• Independently negotiate price and terms
• Engage advisors and ensure documents reflect
terms which have been agreed to
• Document process!!
Analysis of Proposed ESOP Transaction
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41. • Is Trustee required to sell if the offering price is
greater than the current appraised value of the
company?
• In a word, NO
• Look long term, not short (retirement plan)
• Projected value of shares in future vs. net cash
received at closing (value of losing “S” corp tax
deferral)
• CRITICAL: Trustee should rely on guidance
from the Board of Directors – if they believe they
can deliver greater value long term than is
provided for in the offer, why sell?
Sale of ESOP Company
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42. • Run the Company
• Make Management / Strategic Decisions
• Set Compensation (but *do* monitor)
• Look for Acquisitions / Sale Opportunities
What doesn’t a Trustee do?
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43. • Size of ESOP ownership does not affect
trustee fiduciary duties to participants –
same process whether 1% or 100% ESOP
• Size CAN impact influence ESOP trustee
has over the Board and corporate
governance in general.
• Where ESOP is in a majority ownership
position and can vote to replace one or
more board members, then the ESOP
trustee can be catalyst for corporate
change.
ESOP Size Does Matter
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44. • Truth, honesty and open dealing with all relevant
people and facts when making decisions that may
affect stock value.
• Taking care to maintain ESOP independence
when conflicts of interest arise within the BOD or
Trustee(s).
• Using Plan Sponsor’s company assets in a
manner consistent with the best interests of
shareholder(s).
• Providing the ESOP Trustee(s) with sufficient
information and independent resources to protect
ESOP participants.
Key Factors for Governance Success
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45. Some Key Takeaways
• Understand significant risks of wearing
multiple hats
• Understand the role that process and
procedures play to protect individuals in
corporate governance and ESOP
administration
• Understand the need to document all
decision making
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46. Presenters
Daniel N. Janich
Holifield Janich & Associates PLLC
(312) 332-4222 - djanich@holifieldlaw.com
Robert Rachal
Proskauer Rose
(504) 310-4081 - rrachal@proskauer.com
Kevin Kolb
GreatBanc Trust Company
(630) 810-4514 - KKolb@greatbanctrust.com
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