northwest airlines pension plan for contract employees

This additional contribution was agreed upon as a result of a technical concern raised by Fiduciary Counselors regarding covenants in Northwest's $1.125 billion Credit and Guarantee Agreement dated October 24, 2000, as amended under which Northwest is the borrower (the Credit Agreement), with Northwest's bank lenders. does steven weber have a brother; charlie bears lantern; My Cart. informational resource until the Administrative Committee of the Federal Fiduciary Counselors notes, as described in its report, in accepting the Pinnacle Stock contribution, Fiduciary Counselors determined that Pinnacle Stock fit within the Plans' investment guidelines and diversification needs. None of the named plaintiffs is a participant in the Northwest Airlines Pension Plan for Salaried Employees, although they bring this action on behalf of participants in that plan as well. Kondratowicz, a former customer-service agent for Northwest, is a participant in the Northwest Airlines Pension Plan for Contract Employees, which Northwest administers. corresponding official PDF file on govinfo.gov. In the absence of the contribution of Pinnacle Stock, the Plans could suffer from increased underfunding. In this regard, Northwest believes that this provided even more favorable terms for the Plans than those reflected in the Term Sheet.[2]. Total cost is only $ 299.00. In addition, the Independent Fiduciary negotiated the right to engage an investment banker on behalf of the Plans in an IPO, at Northwest's expense. Fiduciary Counselors, AIC and Eclat represent that the ASA between Northwest and Pinnacle provided the framework for the final valuation. The right to engage an investment banker on behalf of the Plans in an IPO, at Northwest's expense. On December 2, 2002, the Employee Stock Plan was divided into three components, which were then merged into the existing Northwest Airlines Retirement Savings Plan for Pilot Employees, Northwest Airlines Retirement Savings Plan for Contract Employees and Northwest Airlines Retirement Savings Plan for Salaried Employees. Here, they assert, the purpose of the exemption, to provide the Plans with a valuable security while maintaining Northwest's liquidity, would be undermined if assets were required to be used as collateral in connection with contributions of Pinnacle Stock. While the U.S. market has suffered tremendous losses due to the slowdown in the U.S. economy and the terrorist attacks of 9/11, the global market has rebounded much quicker. Fiduciary Counselors will also determine fair market value at the time it exercises the Put Option so long as the shares of Pinnacle Stock are not publicly traded. However, if Pinnacle has not yet consummated the IPO by the date that would otherwise be the closing date, Northwest will have the right to defer such closing date for up to 150 days, depending on Northwest's liquidity. Without modifications to the pilot collective bargaining agreement, the Proposed Exemption contemplated that the other two Plans would receive a contribution of Pinnacle Stock in an amount equal to the maximum amount permitted under section 407(a)(2) of ERISA, while the Pilot Plan would receive no contributions of Pinnacle Stock. WebLarkin are participants in the Northwest Airlines Pension Plan for Contract Employees and also worked for the airline during the class period. Use the PDF linked in the document sidebar for the official electronic format. Company profile page for northwest airlines pension plan for contract employees including stock price, company news, press releases, executives, board members, and contact information Northwest also established major hubs at Official Publications from the U.S. Government Publishing Office. The Series C Preferred Stock ranks senior to Common Stock with respect to liquidation and certain dividend rights. If the Pinnacle Stock is not publicly traded, the Plans will receive the. that agencies use to create their documents. endstream endobj 4 0 obj<> endobj 5 0 obj[/Separation/PANTONE#20368#20C/DeviceCMYK 3 0 R] endobj 6 0 obj<> endobj 7 0 obj<> endobj 9 0 obj<>stream Similar considerations will be taken into account by Fiduciary Counselors in determining whether to accept any future contribution of Pinnacle Stock. The closing date may be further deferred and deferred payments may be made by Northwest as agreed to by the Independent Fiduciary if Northwest posts collateral in an amount and on terms satisfactory to the Independent Fiduciary. All transactions involving the Plans in connection with the contribution of Pinnacle shares will be no less favorable to the Plans than arm's length transactions involving unrelated parties. 2007) Argued and Submitted September One of the strengths of the Northwest network is that the airline has the least exposure of any major carrier to low-cost carriers in the industry. travel symbol copy and paste This site displays a prototype of a Web 2.0 version of the daily Northwest's pension fund consists of three individual plans, for about 8,000 pilots, 9,000 salaried employees and 52,000 unionized workers, including mechanics and agents. The restrictions of sections 406(a), 406(b)(1) and (b)(2), and 407(a) of the Act and the sanctions resulting from the application of section 4975(a) and (b) of the Code, by reason of section 4975(c)(1)(A) through (E) of the Code, shall not apply to: (1) The transfer of the common shares of Pinnacle Airlines Corp. (Pinnacle Stock) to the Northwest Airlines Pension Plan for Salaried Employees, the Northwest Airlines Pension Plan for Pilot Employees, and the Northwest Airlines Pension Plan for Contract Employees (the Plans) through the in-kind contribution(s) of such shares by Northwest Airlines, Inc. (Northwest), a party in interest with respect to such Plans; (2) The holding of the Pinnacle Stock by the Plans; (3) The sale of the Pinnacle Stock by the Plans to Northwest; (4) The acquisition, holding, and exercise by the Plans of a put option (the Put Option) granted by Northwest which permits the Plans to sell the Pinnacle Stock to Northwest; and. Additionally, Northwest notes that the Letter Agreement between Northwest and ALPA relating to a voluntary contribution of Pinnacle Stock would provide ALPA with a role in reviewing and approving the termination, and any replacement, of the independent fiduciary. grassroots elite basketball ; why does ted lasso have a southern accent . ; United pilots' pension was terminated in its 2002 bankruptcy and taken over by the pension oversight agency. If accepting an in-kind contribution is not prudent, not solely in the interest of the participants and beneficiaries of the plan, or would result in an improper lack of diversification of plan assets, the responsible fiduciaries of the plan Start Printed Page 49800would be liable for any losses resulting from such a breach of fiduciary responsibility, even if a contribution in kind does not constitute a prohibited transaction under section 406 of ERISA. schneider funeral home mt vernon in obituaries northwest airlines pension information. These modifications and the major comments are discussed below. Ellen A. Hennessy will continue to be the primary person at Fiduciary Counselors handling its responsibilities as independent fiduciary to the Northwest Airlines defined benefit plans. Northwest Response: Northwest states that, because there is a potential for a conflict of interest, the Proposed Exemption required that Northwest appoint an independent fiduciary who is vested with the discretion to determine whether the Plans should acquire, hold or dispose of Pinnacle Stock. For complete information about, and access to, our official publications See Omnibus Agreement at section 6.3. Northwest notes that quarterly valuations were contemplated in the Application, but a change to annual valuations was made when Northwest and Fiduciary Counselors agreed to the Term Sheet. [7] Because the value of the Pinnacle Stock is based on the financial performance of Pinnacle, the Independent Fiduciary reviewed and considered the business of Pinnacle, and the contractual relationship between Pinnacle and Northwest. As noted in the Department's Interpretive Bulletin, 29 CFR 2509.94-3(d) (59 FR 66736, December 28 1994), apart from consideration of the prohibited transaction provisions, plan fiduciaries must determine that acceptance of an in-kind contribution is consistent with ERISA's general standards of fiduciary conduct. On July 11, 2003, Fiduciary Counselors informed the Department that Fiduciary Counselors Inc. (formerly Aon Fiduciary Counselors, Inc.) (Fiduciary Counselors) is no longer a subsidiary of Aon Corporation. Fiduciary Counselors, AIC and Eclat also noted that some of the information used by Eclat for the January 15, 2003 Valuation was not available during the initial valuation in the Eclat Report. Signed at Washington, DC this 14th day of August 2003. WebThe Plan provides that Northwest will determine whether the employee is totally and permanently disabled based on the employee's medical reports. on documents in the last year, by the International Trade Commission Start Printed Page 49808. Webfunny ways to say home run grassroots elite basketball Menu . ]Vu"@eh_AZm*9? (b) A statement that the appraiser is independent of Pinnacle and Northwest, and that the appraiser has no interest in the securities issued by Pinnacle or Northwest. In response to the solicitation of comments from interested persons, the Department received over 1,700 letters, e-mails, faxes and phone calls, of which more than 1,000 requested that a public hearing be held on the Proposed Exemption. developer tools pages. In addition, a fiduciary must act for the exclusive purpose of providing benefits to participants and beneficiaries; must act prudently; and must diversify the investment of plan assets to minimize the risk of large losses, unless under the circumstances it is clearly prudent not to do so. Websurrey accident today 176 street; Servicios. (j) That the fair market value of the stock has been determined by way of a prudent investigation. The Department also questioned whether such restrictions would similarly preclude Northwest from honoring the Put Option. Section 7.2(b) of the Omnibus Agreement requires only that the appointment of a new CEO be approved by a majority of Pinnacle's board (excluding the Northwest Director), and does not make reference to the compensation of Pinnacle's CEO. The Independent Fiduciary must not simply defer to the conclusions reached by the appraiser, but rather will take appropriate action to ensure: (a) That the appraisal is based upon complete, accurate, and current data; (b) That the appraiser is appropriately qualified to conduct the valuation; (c) That the valuation methodologies are appropriate and adequately explained and that the appraiser has adequately justified its decision not to use alternative methodologies; (d) That any variables used in the valuation analysis such as projected revenues, expenses, operating margins, depreciation, discount rates, capitalization rates, and multipliers are adequately supported by market data; (e) That the stock's value is calculated with appropriate discounts for lack of marketability and control after a reasoned evaluation of the relevant market data concerning such discounts, as well as of each Plan's actual ability to effectively dispose of its stock or to control Pinnacle; (f) That the appraisal's reasoning and assumptions are consistent, logical, and supported by appropriate financial and economic data and that any calculations are accurate; (g) That the valuation is based on complete, accurate, and audited financial statements, which have been properly analyzed; (h) That the assumptions underpinning the valuation are properly identified, and a careful analysis is performed of the impact of changes in those assumptions on the value of Pinnacle Stock; (i) That the valuation has appropriately considered Northwest's financial condition in valuing Pinnacle Stock, as well as the impact of a Northwest bankruptcy on the value of Pinnacle Stock; and. The value of Pinnacle Stock is determined by an independent fiduciary, Fiduciary Counselors, based on the valuation provided by their independent valuation firm, Eclat. Washington, DC - The U.S. Department of Labors Pension and Welfare Benefits Administration today announced a proposed exemption that would allow Northwest Airlines, Inc., if granted, to contribute stock of a regional airline affiliate in lieu of cash to On May 20 and June 10, 2003, Northwest responded to certain issues raised during the Hearing that were not responded to in the April 26 Comment. 6. Payment will be made to Fiduciary Counselors, which will remit 75% to AIC. In valuing Pinnacle Stock, the Independent Fiduciary specifically applied a 15% liquidity discount and a 5% discount to take into account that, for some period, the Plans would be a minority shareholder. It is not an official legal edition of the Federal WebBetween Delta and Northwest, the combined airline would have four frozen pension plans, with over $10 billion in outstanding liabilities. As the Plans' independent fiduciary, Fiduciary Counselors must act prudently and in the interests of the Plans and their participants. However, because of its liquidity needs, a cash contribution is not a viable alternative. WebIn addition to your DPSP, some pilots have qualified pension plan benefits being paid by the Pension Benefit Guaranty Corporation (PBGC) or through the Pre-Merger Northwest (PMNW) frozen pension, both with several payment options. Alternatively, Northwest could consider filing for bankruptcy, which would suspend most pension contributions, and could result in termination of some or all of the Plans.. Northwest also believes that the value of Pinnacle Stock is less exposed to bankruptcy risk than Northwest stock. The Additional Initial Contribution served to provide the Plans with added protection until Northwest obtained written assurances from the bank lenders that the Put Option does not violate the Credit Agreement. Document Drafting Handbook ALPA and Northwest informed the Department that the Letter Agreement will be executed by the parties in connection with a proposed voluntary contribution of Pinnacle Stock (described below). The Independent Fiduciary considered, and determined, that the Plans' holding of Pinnacle Stock was consistent with the Plans' investment guidelines and would not impair the Plans' diversification. The exemption permits: (1) The in-kind contribution(s) of the common stock of Pinnacle Airlines Corp.[1] Northwest has entered into a 10-year ASA with Pinnacle through 2012 that provides substantial value. The Independent Fiduciary must ensure that each appraisal, at a minimum, includes the following elements: (a) A summary of the appraiser's qualifications to evaluate Pinnacle Stock. On August 1, 2003, in response to the Department's questions concerning the legal restrictions that prevented Northwest from repurchasing the Series C Preferred Stock and whether these legal restrictions were tied to Northwest's financial condition, Northwest explained that in making the Series C stock repurchase decision, the board of NWA Corp. was subject to a Delaware law that applies only to NWA Corp.'s repurchase of its own stock. In addition, the Independent Fiduciary will monitor on an ongoing basis the prudence of the Plans' continued holding of Pinnacle Stock consistent with the fiduciary standards of ERISA. Webnorthwest airlines retirement savings plan for contract employees Examples of this type of plan are 401(k), 401(a), Employee Stock Ownership Plan (ESOP), Savings Plans Both the Minnesota law and the Delaware law relate to the repurchase of the stock issued by Northwest Airlines, Inc. and NWA Corp., respectively, and would not apply to the repurchase of stock of Pinnacle (the Pinnacle Stock). If the A decision to issue only additional Common Stock must be approved by a majority of the three directors elected by the holders of the Series C Preferred Stock. If Fiduciary Counselors and Northwest are unable to agree on the valuation expert, the Omnibus Agreement sets forth a dispute mechanism to arrive at a final determination. The Northwest Airlines Pension Plan for Contract Employees is approximately forty percent of the Master Trust. The President of the United States issues other types of documents, including but not limited to; memoranda, notices, determinations, letters, messages, and orders. We want to do so as soon as possible. Finally, Fiduciary Counselors requests that in Section III. Once Pinnacle Stock is publicly traded, the Put Option will be suspended if all of the remaining shares of Pinnacle Stock held by the Plans have a market value not less than 110% of the Floor Price and such shares are freely tradable. (Id. Eagan, MN 55121-1534. 4 of 1978 (5 U.S.C. Pursuant to its engagement letter with Northwest, the scope of Fiduciary Counselors' engagement includes determining whether to accept the Contribution on behalf of the Plans, and if so, to value the Pinnacle Stock for Plan funding purposes. Fiduciary Counselors adds that AIC, which remains a subsidiary of Aon, will continue to act as advisor in connection with this engagement. Maintaining liquidity is key to Northwest's strategy for avoiding bankruptcy. &`bT2(:x#SbycDC`Y]L iY \^ij60h+Zra*dBSx42m 5OuIo*R3"Ee[Kvc-4yY`~rtuz$3.'7Kr1ip#&VK:!L+CQ]i &kktL4NcBG!YZL*In7 [[a`nO93E3#$-#:%6MQI96cI ,YtHF#GFKqH%f_l`x]CC9{f'x(+r}L`spt{5uZG@%wbh(S:,.ke,}V)6cf8. The Independent Fiduciary must ensure that all of the conditions above are satisfied with respect to any past contributions of Pinnacle Stock, as well as any future contributions. Websurrey accident today 176 street; Servicios. ACTION: Notice of proposed individual exemption. endstream endobj 10 0 obj[/Separation/PANTONE#20186#20C/DeviceCMYK 9 0 R] endobj 11 0 obj<> endobj 12 0 obj<>stream The purpose of collateral would be to protect the Plans from declines in the value of Pinnacle Stock and secure the Put Option accorded to the Plans. There were significant changes made to the original valuation performed for the PBGC (the Eclat Report) based on this agreement that proved to be more conservative with respect to the ultimate valuation. 4. Subject to the further conditions and restrictions set forth in the Omnibus Agreement, the Plans may transfer the Pinnacle Stock prior to July 1, 2006, (1) only in the event of an IPO or sale to a third party initiated by Northwest, (2) by exercise of the Put Option (as described below), or (3) because of an Early Termination Event (including a breach of the Omnibus Agreement by Northwest or Pinnacle which is not cured timely or Northwest's failure to honor the Put Option). Once these growth assumptions are made, the present value of expected free cash flow is calculated. As described in the Proposed Exemption, the current provisions of the Pilot Plan and the pilot collective bargaining agreement prohibit the Pilot Plan from acquiring or holding employer securities. Page 49 of 61. The Independent Fiduciary notes that the Proposed Exemption, in the first column of 68 FR 2580 (first full paragraph), makes reference to voting restrictions and limits on the ability of the Plans to dispose of the Pinnacle Stock, except pursuant to an initial public offering (IPO) initiated by Northwest or by exercise of the Put Option. Total cost is only $ The Contract Plan, the Salaried Plan and the Pilot Plan will have the same registration rights provided in the Omnibus Agreement dated January 15, 2003 between Pinnacle Airlines Corp., Northwest and Fiduciary Counselors. Moreover, the Plans will receive all of any investment gains attributable to their shares of Pinnacle Stock at the time of an IPO. The hearing on the Proposed Exemption was held on May 5 and 6, 2003 at the Department of Labor (the Hearing). See Omnibus Agreement at section 11.2. Participants and beneficiaries of the Plans stand to benefit from an IPO of the Pinnacle Stock. Northwest stated that it would not. Northwest Airlines Pension Plan 3 employees reported this benefit 2.0 1 Rating Available to US-based employees Change location Employee Northwest notes that the board previously approved the Omnibus Agreement, which includes the Put Option, and no further action would be required of the board in the event that the Put Option is exercised by the Independent Fiduciary. The IF Report states that on January 15, 2003, Fiduciary Counselors determined that the Master Trust could accept a contribution by Northwest of 1,938,000 shares of Pinnacle Stock, valued at $43,821,894.00, on behalf of the Contract Plan on terms and conditions set forth in the Omnibus Agreement. Since September 10, 2001, regional airlines have lost 48% of their value while the major airlines have lost 78% (excluding U.S. Airways and United that have filed for Chapter 11 bankruptcy protection). While every effort has been made to ensure that Fiduciary Counselors notes that there will be no change in its providing objective and independent investment management. In this regard, section 404(a)(1)(A) and (B) of ERISA requires that fiduciaries discharge their duties to a plan solely in the interests of the participants and beneficiaries, for the exclusive purpose of providing benefits to participants and beneficiaries and defraying reasonable administrative expenses, and with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims. AIC valued the Put Option at $20,680,684 using a Black-Scholes American option-pricing model.

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