Also known as:pension plan · pension-plan · qualified plans · ERISA plans
Written by attorneys · grounded in primary & secondary sources — see below
A retirement benefit arrangement that an employer establishes to provide periodic payments or lump sums to current or former directors, officers, employees, and agents after they leave service. The arrangement may take the form of a defined-benefit plan, a defined-contribution plan, or a hybrid that combines features of both. Corporate statutes expressly authorize business entities to create and fund such plans as part of their general powers.
Sources & Authorities
How it applies
Common Examples
3
Corporation Funds Former Manager Pension
Phoenix Technologies adopts a written plan that pays a monthly lifetime pension plus annual share bonuses to Perry Pratt after he retires as plant manager. Pratt later works for the company as an independent sales representative under a separate commission contract. A new board votes to rescind the plan, claiming it exceeds corporate authority. The court rejects the claim because the statute permits pension and share-bonus arrangements for former employees and agents.
Board Approves Hybrid Pension Plan
Apex Manufacturing creates a hybrid pension plan combining defined-benefit payments with profit-sharing contributions for its officers and agents. After two years the board expands coverage to include former employees who now serve as consultants. A shareholder sues claiming the expansion exceeds corporate powers. The court upholds the plan because the statute expressly permits such arrangements for current or former directors, officers, employees, and agents.
Select any source to read its text and confirm it supports the definition.
Cases
Uniform Acts
Model Codes
Restatements
Course Outlines
Shareholder Challenges Pension Trust Funding
Summit Industries funds a pension trust and share-option plan covering its current directors and key employees. A dissident shareholder alleges the expenditures are ultra vires and waste corporate assets. The court dismisses the claim, holding that Model Act section 3.02(l) expressly grants corporations power to establish and fund pension and incentive plans for any or all of the listed classes.
Common questions
Frequently Asked
2
Does a corporation exceed its powers by adopting a pension plan that favors directors over rank-and-file employees?+
No. The statute expressly authorizes a corporation to establish pension and incentive plans for any or all of its current or former directors, officers, employees, and agents. The grant is not limited to nonmanagement employees and does not require equal treatment across participant classes. Any fairness issue would be addressed under fiduciary-duty doctrines rather than an ultra-vires claim.
Supporting sources
May a corporation grant pension and share-bonus benefits to a former employee who later serves as an independent contractor?+
Yes. The statute covers current or former directors, officers, employees, and agents. A retired manager who continues to perform services as an independent sales representative qualifies as a former employee and as an agent, so the plan falls within corporate authority.
Supporting sources
532 U.S. 141 (2001)Family Law
…to David A. Egelhoff. Mr. Egelhoff was employed by the Boeing Company, which provided him with a life insurance policy and a pension plan. Both plans were governed by ERISA, and Mr. Egelhoff designated his wife as the beneficiary under both. In April 1994, the Egelhoffs divorced. Just over two months later, Mr. Egelhoff died…