Pensions & Benefits Law : Canada Pension & Benefits Lawyers & Attorneys : Osler Hoskin & Harcourt Law Firm: Post-Employment Benefits & Defined Benefit Plans : Toronto, New York

Recent U.S. rules requiring shareholder votes on executive compensation are being watched carefully by Canadian issuers.

The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) calls for mandatory say-on-pay votes at all annual meetings of U.S. issuers and certain foreign issuers that are subject to the Securities and Exchange Commission’s proxy rules. Shareholders will also vote on whether they want the vote to occur every one, two or three years. Although both of these votes are non-binding advisory votes, companies and shareholders are paying close attention to the results. In addition, the Dodd-Frank Act requires disclosure of golden parachute arrangements and shareholder approval of such arrangements in connection with meetings held under the U.S. proxy rules to approve acquisition transactions.

For more information on these say on pay developments, see the Osler Update: Shareholders Have Their Say: Say on Pay Developments in U.S. and Canada.

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In many asset sales, buyers expressly state that they are not assuming any liability for pre-closing benefit plan operations. Parties to these transactions have assumed that courts will respect these disclaimers, but the reality is that there is some troubling authority on successor liability under ERISA where a seller fails to provide benefits or make contributions.

There are a few specific instances, for example under COBRA  where a buyer may automatically have successor liability for continuing benefits if the seller of the business terminates all coverage. A recent decision by the Court of Appeals for the Third Circuit has created even more cause for buyer concern.

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Late last week, the Ontario government announced that it would provide temporary solvency funding relief to certain public sector and broader public sector (BPS) pension plans. Obtaining such relief, however, will not be an easy matter. The government has made it clear that in an effort to ensure that these plans are sustainable in the long term, there will be many “hoops” for plan sponsors to jump through.

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The New Brunswick Court of Queen’s Bench decision in Tower Estate v. Tower Estate serves as yet another reminder that a prescribed written beneficiary designation trumps other less specific documents purporting to revoke or substitute a named beneficiary.

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More than one third of employers offer ROTH 401(k) contributions as an option in their 401(k) plans, according to a recent AON Hewitt survey, and an additional 38% of those remaining indicate that they will add them in 2011. After languishing for years, ROTH contributions have taken off at least partly because of 2010 changes in the US tax rules. Plan sponsors should consider the pros and cons of this option.
 

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The Office of the Superintendent of Financial Institutions (OSFI) recently released the “Guide to Intervention for Federally Regulated Private Pension Plans” (the Guide), which outlines the varying degrees of scrutiny that federally regulated plan administrators can expect from OSFI and the circumstances under which intervention measures may be taken.

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