Drinker Biddle’s Employee Benefits and Executive Compensation team helps clients throughout the United States achieve their business and human resources objectives in this extensively regulated area. Our clients include national and international corporations, banks, insurance companies, mutual funds and other investment entities, utilities, transportation companies, hospitals, governmental units, schools, universities, churches and other non-profit organizations. We represent publicly traded companies, domestic subsidiaries of foreign companies, and privately held entities. The diversity of our client base and their human resource needs have given the team a broad range of experience in all aspects of employee benefits and executive compensation matters.
Drinker Biddle has a sophisticated broad-based executive compensation practice that includes negotiating, drafting and implementing deferred compensation and equity compensation arrangements. Our clients span a broad spectrum – from start-up companies to small and mid-size privately-held companies to large publicly-traded companies.
Our practice includes negotiating on behalf of client companies, private equity managers and senior management executives, as well as drafting omnibus equity plans and agreements, supplemental executive retirement plans, employee stock purchase plans, profits interest plans and agreements, employment, severance and change in control agreements. We also advise our clients on the Securities Law aspects of equity compensation and executive compensation, draft prospectuses for equity plans, review proxy disclosures and prepare certain proxy tables.
We have carved out a niche in dealing with issues that arise in the private equity context, such as addressing the impact of extraordinary dividends paid by a portfolio company to private equity managers and option repricing, and crafting performance goals with the private equity manager in mind. We also have special expertise in the area of section 457A of the Internal Revenue Code, which is targeted toward deferral of compensation payable to managers of offshore hedge funds.
We have extensive experience in benefits issues arising in the transactional context. We advise and counsel on the employee benefits and executive compensation aspects of corporate transactions, including performing a pre-sale audit to identify potential benefit plan issues; evaluating statutory and operational compliance of a seller’s employee benefit plans from a buyer’s perspective; advising on and crafting indemnification provisions to address potential successor liability issues, especially with regard to a seller’s participation in a multiemployer plan; and dealing with post-closing matters related to the integration of a seller’s benefit plans into a buyer’s benefit structures.
Where transactions involve international benefits, we assist in identifying and coordinating benefits due diligence with foreign counsel to address international compensation and benefit issues. Our work has included identifying and resolving specialized tax issues that arise in the context of deal work – such as golden parachutes, equity and qualified and nonqualified plan termination issues. In the private equity context, we advise on plan asset issues and assist private equity funds in complying with the VCOC exception under the plan asset rules.
Mergers and Acquisitions. In mergers and acquisitions, we advise employers on employee benefits and executive compensation matters and negotiate and draft the benefits provisions of sales agreements. We conduct due diligence regarding the employee benefits and executive compensation of target businesses. We also advise on plan mergers, spinoffs, transfers of assets and liabilities, partial terminations and benefit distribution issues. We have particular experience in dealing with multiemployer pension plans.
Commercial Lending. In commercial lending, we advise borrowers and lenders on the employee benefits and executive compensation aspects of business loans and negotiate and draft the applicable provisions in loan agreements.
Workouts and Reorganizations. In workouts and reorganizations, we advise debtors and creditors on employee benefits and executive compensation aspects of Chapter 11 and Chapter 7 bankruptcy filings and represent debtors in bankruptcy with respect to their benefit plans.
Unlike many large firms, we not only support our transactional practices, but also maintain a substantial “benefits only” practice. We handle all aspects of section 401(k), pension, cash balance, profit-sharing, and stock bonus plans for our clients and obtain Internal Revenue Service approval for new and amended plans. As part of our executive compensation work, we deal with incentive stock option, nonqualified stock option, stock grant, employee stock purchase, stock appreciation rights and phantom stock plans of our clients. We also counsel clients on nonqualified deferred compensation (“top-hat”) plans, supplemental retirement plans, rabbi trusts, employment agreements, severance agreements, change-in-control agreements and retention bonus programs.
We counsel employers and lenders about all aspects of employee stock ownership plans (“ESOPs”). For example, we have assisted clients and their shareholders with section 1042 transactions (the rollover of gain on the sale of employer stock to the employer’s ESOP).
We advise our governmental clients about governmental plans and section 457 deferred compensation plans, and our tax-exempt clients about section 403(b) tax-deferred annuity and custodial account plans and section 457 deferred compensation plans.
We also work with health and accident, dental, severance, life insurance, dependent care and disability plans, including cafeteria (flexible benefit) plans, and voluntary employees’ beneficiary associations.
Advisory, Compliance and Consulting Services
We advise our clients on compliance with COBRA, the Americans with Disabilities Act, the ADEA, and the Family and Medical Leave Act. We prepare annual returns/reports (Forms 5500) and forms used in the daily administration of our clients’ plans. We represent clients in IRS and Department of Labor audits and advise them about (and prepare filings under) the IRS’s Employee Plans Compliance Resolution System and the DOL’s Voluntary Fiduciary Correction Program and Delinquent Filer Voluntary Correction Program.
We advise our clients regarding fiduciary responsibility and prohibited transactions and we draft requests for DOL and IRS exemptions, opinions and rulings.
Assistance to Other Practices
Our team works closely with a number of other practices in the firm, particularly with the Corporate and Securities Practice Group when employee benefits and executive compensation issues involving mergers, acquisitions, and sales of businesses arise and we help that practice group deal with securities issues involving employee benefits and executive compensation. We also assist the Investment Management Practice Group when ERISA issues arise in connection with the investment of money held by employee benefit plans and individual retirement accounts in mutual funds and other investment entities.