Ninth Circuit rules that ESOP Trustees' Payment of Excessive Executive Compensation Could be Breach of Fiduciary Duty

The Ninth Circuit has ruled that, where one of an ESOP's trustees was also the company's president, and on its board of directors, the trustees' “business decisions” leading to the payment of excessive executive compensation to the company president could constitute a breach of ERISA fiduciary responsibility to the ESOP. Johnson v. Couturier, (2009, CA9) 572 F.3d 1067. The court also ruled that ERISA preempted the indemnification agreements provided by the company to the president as a director and ESOP trustee.

Continue Reading...