Employee Benefits and Executive Compensation

Our Employee Benefits and Executive Compensation Group has knowledge and experience extending to the selection, design, implementation and operation of a wide variety of employee benefit plans, arrangements and transactions, including:

  • Tax-qualified retirement plans, including pension, profit sharing, 401(k), 403(b), cash balance, employee stock ownership (ESOPs), collectively bargained and master and prototype plans, and advice on the provisions of the Internal Revenue Code and ERISA applicable to these plans
  • Non-qualified deferred compensation arrangements, including supplemental retirement plans, and compliance with Section 409A of the Code
  • Equity-based plans providing awards such as stock options, stock appreciation rights, restricted stock, restricted stock units and phantom shares; dividend reinvestment plans and other short and long term incentive arrangements, such as annual bonus, "stay-bonus" and retention plans
  • Employment, consulting, severance and change in control agreements including compliance with Sections 280G and 409A of the Code
  • Health and welfare plans (both insured and self-insured arrangements) and advice on the provisions of Internal Revenue Code, ERISA, PPACA, HIPAA, HITECH and COBRA applicable to these plans
  • Compensation and benefit issues in corporate transactions, such as mergers, acquisitions and financing transactions;
  • Fiduciary responsibility, plan investment and plan asset issues
  • For public company clients, compliance with securities law, including preparation of proxy statements and prospectuses, Section 16 reporting, filing of registration statements, Form 8-K disclosure, as well as compliance with Section 162(m) of the Code;
  • Collectively bargained plans (for both individually sponsored and multiemployer plans), including issues relating to delinquent contributions and withdrawal liability
  • Representing clients in disputes over benefit issues with participants, unions, third-party administrators, insurance companies and governmental agencies. We collaborate with our litigation attorneys in defending employers, plans and ERISA fiduciaries in claims involving benefit plans, such as disputes involving plan investment decisions, retiree medical benefits, multiemployer plans, severance agreements, supplemental executive retirement plans, plan fees and fee disclosure, benefit changes and denials of benefits

Our clients include business corporations, banks, insurance companies, hospitals, not-for-profits, governmental entities, partnerships, mutual funds, hedge funds, foreign entities, third-party plan administrators as well as companies in regulated industries, such as public utilities, railroads and financial markets. In addition, we represent individual executives and employees in connection with compensation and benefits issuers.

We actively monitor legal developments and assist clients in complying with new legislation and regulations.

Tax Qualified Plans

We counsel clients in connection with all aspects of design and administration of tax-qualified plans, including pension, profit sharing, 401(k), 403(b), cash balance, employee stock ownership (ESOPs), collectively bargained and master and prototype plans, and advice on the provisions of the Internal Revenue Code and ERISA applicable to these plans.

We assist in establishing and maintaining qualified plans and help plan administrators in the day to day operation of plans, including issues related to interpretation of plan provisions, the processing of benefit claims and reviewing qualified domestic relations orders.

We secure determination letters and private letter rulings from the Internal Revenue Service, as well as closing agreements for plan corrections under the Employee Plans Compliance Resolution System (EPCRS).

We assist in terminating qualified plans, including the disposition of surplus plan assets, and securing appropriate approvals from the IRS and the Pension Benefit Guaranty Corporation (PBGC) upon plan termination.

Non-Qualified Deferred Compensation and Supplemental Retirement Arrangements

We assist in the design and implementation of all types of deferred compensation and supplemental retirement arrangements, in compliance with applicable statutory and regulatory requirements, including Code Sections 162(m), 280G and 409A and securities laws and exchange rules. This includes advice regarding deferred compensation and/or retirement arrangements for highly compensated and management employees and advice concerning the "funding" of such arrangements with grantor and secular trusts.

Equity and Incentive Compensation Plans

We assist in the design and implementation of equity and incentive compensation plans and address the tax and securities law issues related to such plans. These plans range from short and/or long term incentive and bonus plans, to equity and performance-based plans that provide various types of compensation, such as:

  • Incentive and non-qualified stock options
  • Stock appreciation rights
  • Restricted stock
  • Stock units
  • Phantom shares
  • Dividend reinvestment arrangements
  • Retention and "stay bonus" arrangements
  • Stock purchase plans

We counsel clients with respect to the registration of securities offered under such plans as required by the Securities Act of 1933 and state "blue sky" securities laws, and the applicability of exemptions from registration, including private placement exemptions and Rule 701 of the Securities Act of 1933. We also assist clients with the preparation of registration statements on Form S-8 or S-3, disclosure documents, including proxy statements and prospectuses, reporting requirements and short-swing trading prohibitions applicable to officers and directors under Section 16 of the Securities Act of 1934 and Form 8-K disclosures.

Employment, Consulting, Severance and Golden Parachute Agreements

We design and advise regarding employment and consulting agreements, severance agreements and plans and change in control agreements. This includes advice on golden parachute issues under Code Section 280G and compliance with Code Section 409A, as well as advice regarding layoffs in the context of company downsizings.

Welfare Plans and Healthcare Reform

We provide counsel regarding health, life, disability and other employee "welfare" benefit plans, including retiree medical benefits. We review documents to ensure compliance with ERISA and the health care reform provisions of the Patient Protection and Affordable Care Act (PPACA), as well as the Health Insurance Portability and Accountability Act (HIPAA), the Health Information Technology for Economic and Clinical Health Act (HITECH) and the Consolidated Omnibus Budget Reconciliation Act (COBRA).

We advise regarding pre-tax premium and flexible benefit arrangements, including premium conversion, medical flexible spending account and dependent care flexible spending account plans, health reimbursement accounts (HRAs) and health savings accounts (HSAs).

We provide counseling with regard to the general administration of these plans and respecting the various non-discrimination rules that apply to some of these plans.

We review and negotiate contracts with insurance companies, HMOs, third-party administrators, and business associates.

Corporate Transactions

We advise on employee benefit and compensation aspects of corporate mergers, acquisitions, dispositions, leveraged buyouts, recapitalizations and similar transactions.

We analyze the employee benefit and compensation arrangements of the parties to these transactions, draft appropriate language for the purchase/sale agreements and provide advice regarding the issues that arise in the context of these transactions, such as the settlement of incentive and equity plan arrangements and golden parachute payments, conversions of stock plans, the integration of buyer and seller retirement and welfare plans and the assumption of COBRA continuation coverage liability and retiree medical benefits.

Fiduciary Responsibility Plan Investment and Plan Asset Issues

We advise generally concerning ERISA's fiduciary responsibility requirements. This includes counsel with respect to ERISA's prudence and diversification requirements, prohibited transaction rules and fee disclosure rules.

We assist in the selection and appointment of investment managers and the selection of pooled investment and other investment vehicles.

We also counsel regarding the fiduciary and prohibited transactions issues relating to benefit plan investors holding "significant" equity participation in non-public securities and non-registered investment funds (the so-called "25% Rule"). We advise on the use of venture capital operating companies (VCOCs) and real estate operating companies (REOCs) to deal with these plan asset issues.

Employee Stock Ownership Plans

Schiff Hardin's employee stock ownership plan (ESOP) practice is recognized nationwide. Our attorneys have been involved in hundreds of ESOP transactions, serving as legal counsel to clients all over the country. These transactions range from a few million dollars to nearly two billion dollars.


Schiff Hardin's attorneys act as legal counsel to companies in establishing ESOPs and in executing employee and management-led buyouts. Our clients have run the gamut from large publicly held companies to closely held companies with a single individual owner.

We frequently serve as the lawyers for institutional and individual trustees. In some cases, our representation is solely for purposes of completing a specific ESOP transaction. In other cases, our representation continues after the closing of the transaction, with our members representing the trustee with respect to continuing administrative and fiduciary issues.

Schiff Hardin also represents senior lenders and other lenders that are making loans to companies or ESOPs in leveraged ESOP transactions.


Schiff Hardin attorneys have represented companies in all lines of business, such as:

  • Architects
  • Banks and bank holding companies
  • Distributors
  • Home health agencies
  • Manufacturers
  • Nursing homes
  • Oil and gas distributors
  • Printers
  • Public utilities
  • Real estate managers
  • Restaurant chains
  • Publishers
  • Service providers of all types

This experience has given our ESOP attorneys in-depth knowledge of the business issues facing the companies in these industry segments.

Approach to ESOP Transactions

We counsel clients on:

  • Corporate law
  • ESOP design
  • Executive compensation
  • Finance
  • Securities law
  • Tax aspects of ESOP transactions

Our attorneys work as a team with accountants, business appraisers, financial advisors, commercial bankers, investment bankers, institutional trustees, private equity funds and other sources of capital, and third party administrative firms in order to design, document and execute transactions for our clients efficiently.

Government Audits of ESOPs and ESOP Transactions

Our attorneys have extensive experience representing companies and ESOP trustees in U.S. Department of Labor and Internal Revenue Service (IRS) audits of ESOPs and ESOP transactions. We have an in-depth knowledge of the legal issues surrounding valuation of closely held companies — issues that often are a focus of these audits. We also have years of experience with using the remedial programs of the Department of Labor and the IRS to correct mistakes and oversights in the administration of ESOPs.

Cash Balance Plans

Schiff Hardin attorneys have significant experience in drafting cash balance pension plans and counseling clients regarding the conversion of their existing defined benefit pension plans to cash balance retirement plans. We also counsel clients on the effect of the cash balance provisions in the Pension Protection Act of 2006 on existing and new plans.