The Employee Benefits and Executive Compensation Practice Group offers a full range of legal services in the area of employee benefits and executive compensation, including all aspects of qualified and non qualified retirement and welfare programs for profit and non-profit organizations, executive compensation, and the legal and tax implications associated with these programs.

ERISA

The Group provides counseling relative to fiduciary obligations under ERISA, by advising in-house fiduciaries and administrative committees regarding their fiduciary responsibilities. We handle litigation in Federal and State courts and administrative proceedings with the Department of Labor, Internal Revenue Service and the Pension Benefit Guaranty Corporation arising under ERISA and other applicable laws.

Qualified and Non-Qualified Benefits

The Group designs, implements and obtains approval of tax qualified employee benefit programs such as defined benefit plans, target benefit plans, profit sharing plans, money purchase pension plans, 401(k) plans, 403(b) plans, savings plans, employee stock ownership plans, stock option plans, incentive compensation plans and welfare plans.

We also advise on 401(k) accounts in qualified retirement plans for the payment of retiree medical benefits, the preparation of non qualified supplemental retirement income plans, stock option plans, section 457 plans and other types of deferred compensation programs.

The Group is also highly skilled in advising on the securing of non qualified benefits to assure employees that they will receive their promised benefits, notwithstanding a change in control or the financial status of their employer. We have established numerous "rabbi trusts" and have also completed several projects for clients to secure these non qualified benefits through the purchase of annuities from an insurance company. In addition, we have published several articles evaluating the respective merits of different methods of securing non-qualified benefits and have worked with numerous not-for-profit organizations in establishing section 457 qualified and non-qualified deferred compensation plans.

Executive Compensation

Our attorneys regularly counsel senior executives in connection with their severance arrangements following a change in control or a corporate downsizing. We represent numerous clients in the preparation of innovative incentive compensation arrangements for their top executives. We also advise on stock option plans, variable compensation plans, phantom stock plans and other forms of incentive compensation, including plans designed to comply with Internal Revenue Code Section 162(m) (the $1 million pay cap).

Employee Stock Ownership Plans

We regularly advise clients on employee stock ownership plans that have experienced a larger than anticipated increase in the value of the company's stock.

We also provide counsel on highly complex (employee stock ownership plan) ESOP transactions, and provide highly innovative solutions that are tailored to unusual problems faced by our clients. For example, in one transaction, a client faced a significant issue with its leveraged ESOP because of a substantial increase in the value of the company's stock and a reduced number of employees. The result was that the ESOP had substantially more assets than necessary to accomplish the original objective of the ESOP. Through a detailed planning process, we were able to craft an innovative solution that was beneficial to the company and the employees.

In another transaction, a client acquired a company which had a leveraged ESOP that our client wanted to terminate. Our attorneys were able to design a unique solution that accomplished the client's objective and benefitted employees. In a different transaction, the client had the opposite problem with a declining stock price. In that instance, we devised a solution for the leveraged ESOP which solved a significant problem for the client.

Change in Control Arrangements

As counsel to clients that have acquired numerous companies in recent years, we have been instrumental in advising these clients on how best to manage the integration of multiple benefit plans and compensation plans. We have represented clients in connection with the employee benefit aspects of acquisitions and divestitures, including integration of the acquired company's benefit plans into that of the acquiring company; the use of ESOPs in leveraged buyouts; and the problems associated with the disposition of employee stock ownership plans of acquired companies.

We often advise clients with regard to change in control arrangements as they affect employee benefits, including designing and implementing "golden parachute" and "tin parachute" arrangements; establishing mechanisms to secure non-qualified benefits through the use of a "rabbi trust," a "secular trust" or through the purchase of annuities; and the protection of surplus pension assets in hostile takeovers.

Trustee Matters

We regularly represent institutional trustees, including drafting and negotiating trust agreements and counseling on compliance with fiduciary standards, and representation of pension trust funds for real estate acquisitions, sales and financing, venture capital investments and securities transactions.

In addition to the more traditional scope of employee benefits work, we represent trustees and investment advisors of benefit plans in connection with their investment activities in real estate, venture capital, and general securities transactions.

Employee Benefits

We advise clients regarding the purchase of life insurance, and medical insurance programs and other welfare benefit plans for employers and employees, including company owned life insurance (COLI). The Group advises clients with respect to claims for withdrawal liability from multiemployer pension plans, including representation during arbitration proceedings and litigation.

We also advise clients with respect to consulting and employment agreements; income and estate tax planning relating to employee benefits for individuals and represent coalitions of major employers and local governments created to negotiate with health care providers.

Pioneer of the "Pension Parachute"

The Group has extensive experience handling surplus assets in qualified pension plans and the protection of pension assets in hostile takeovers. Our lawyers originated the concept of the "pension parachute," a device to prevent surplus pension assets from being obtained by an acquirer in a hostile takeover. The first "pension parachute" was completed by Kelley Drye for Union Carbide, and its design was upheld by the federal courts in Union Carbide's litigation with GAF.

Our Approach to Client Service

While ensuring our clients' compliance with the complex rules governing benefit and compensation plans is vital, we believe that our most important role is that of problem-solver. We pride ourselves on our ability to work hand-in-hand with our clients to understand their goals, and to craft unique and novel ways to achieve them. Our combination of experience, judgment, knowledge and creativity frequently enables us to craft solutions for clients after other law firms had suggested their goals were not realistic.

For further information about Kelley Drye's Employee Benefits & Executive Compensation Practice Group, please contact:

Alan J. Laska
(212) 808-7624
alaska@kelleydrye.com

Richard S. Chargar
(203) 351-8028
rchargar@kelleydrye.com