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Eighth Circuit Holds that Failure to Follow the Plain Language of the Plan is Abuse of Discretion

Within three years following the acquisition of Anheuser-Busch Companies (the ?Ç£Company?Ç¥) which resulted in a change-in-control, the Company sold its entertainment division. The Company?ÇÖs pension plan provided that a plan participant ?Ç£whose employment with the Controlled Group is involuntarily terminated within three (3) years after the Change in Control?Ç¥ would be eligible for enhanced pension benefits. The Company determined that the employees of the entertainment division were not eligible for enhanced pension benefits because they continued working with the successor entity after the sale and therefore did not terminate employment. The district court and the Eighth Circuit disagreed. Applying a plain-text analysis to the plan, the Eight Circuit determined that because the employees were no longer employed with the controlled group, their ?Ç£employment with the Controlled Group?Ç¥ had terminated. Although the plan granted the Company discretion to interpret terms and decide benefits, it was an abuse of discretion to not… Continue Reading

Ordinary Equity Issuances to Company Insiders Can Result in HSR Act Violations and Penalties

Directors, officers, and other persons who directly or indirectly hold common stock worth close to or more than $80.8 million (the threshold amount for 2017) should consult legal counsel before acquiring any more shares to determine if compliance with the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act“), is required prior to completing any additional acquisitions. In recent years, the Federal Trade Commission and the U.S. Department of Justice have more aggressively enforced the HSR Act, including inadvertent failures to file that occur when an insider of a company with significant equity value acquires a small number of shares-whether through a restricted stock grant, shares issued as director compensation, the exercise of a stock option, open market purchases, or otherwise. For example, in January 2017, the agencies imposed a fine of $780,000 on an individual who was a founder, officer, and director of a company for his… Continue Reading

March 2017
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