Stock-based bonuses not considered compensation in calculating top-hat plan benefits - 29 Apr 2011

CCH® PENSION — 04/29/11

Stock-based bonuses not considered compensation in calculating top-hat plan benefits

Stock-based payments are considered bonuses and should not be
considered compensation for purposes of calculating benefits in a
top-hat plan, the U.S. Court of Appeals in Chicago (CA-7) has ruled in Comrie v. IPSCO, Inc..
The court rejected an executive's claims urging that plan language that
conferred interpretive discretion on an administrative committee should
be disregarded because the committee had a conflict of interest and
that a top-hat plan administrator is not a fiduciary under ERISA.
According to the appellate court, the administrators of the top-hat plan
did not act arbitrarily or capriciously.

Background

A company established an unfunded supplemental executive retirement
plan, a top-hat plan, for its top executives. Under the terms of the
plan, any executive whose employment is involuntarily terminated within
two years of a change in control is eligible for benefits without regard
to an otherwise applicable cap. The top-hat plan also defines
"involuntary termination" as any

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