Retirement Benefits

1
Retirement Benefits
2
Retirement Benefits
3
Valuation/Division

• Method 1 Cash out
• Determine PV of pension benefit, accounting for
  risks it will not vest and/or mature
• Award non-ee spouse offset of equivalent share
  from other property
• Method 2 In kind
• Award non-ee spouse share of future pension
  payments to be paid when obtained
• No need to determine PV, or use where cannot
  determine PV
• Retain jurisdiction to enforce payments
• Court has discretion to choose method

4
Marriage of Lehman

• Defined benefit plan factors
• Age
• Years of service
• Per-year multiplier
• Final compensation
• Reduction of 18 for early retirement
• VRI
• Credit 3 putative years service
• Waive 18 reduction
• Must be at least 50 years old and have 15 years
  service

5
Marriage of Lehman

• Actual facts
• 3,059.30 per month
• Age 54.33, final comp. 5,360.43, service 35.67
  years (incl 3 putative), 1.6 per year multiplier
• At 55 (early)
• 2,350.39 per month
• Age 55, final comp. 5,360.43, service 33.42
  years, 1.6 multiplier, 18 reduction
• At 65
• 3,724 per month
• Age 65, final comp. 5,360.43, service 43.42
  years, 1.6 multiplier
• Difference w/ 55 708.91 per month

6
Marriage of Hug 4 year vesting30, 25, 25,
20
7
Marriage of Hug 1984

• Stock options how to classify?
• Whether they can be characterized as
  compensation for future services, for past
  services, or for both, depends on the
  circumstances involved in the grant of the
  employee stock option.
• Attract/retain executives (blue chip model)
• Alternative to salary (start-up model?)
• Bonus compensation for past services?
• Apply time rule flexibly in this case consider
  the entire period of employment, including
  pre-option period
• Principle is to match the intent of the ESO and
  the character of the labor being compensated