Question
From: (Redacted)
Sent: Thursday, February 04, 2010 9:39 AM
To: Verne, B. Michael
Cc: Johnson, Janice C.; (Redacted)
Subject: HSRReporting Requirements re 401 (k) Plan Distribution of Voting Securities
Attachments:0403015.pdf
Mr. Verne,
Would you beavailable later today or tomorrow, or at a convenient time next week, for aconference call with your colleague Janice Johnson, my colleague (redacted)and me to discuss potential HSR reporting requirements relating to thedistribution of company stock by a 401 (k) plan to an executive of the company?
The circumstances that we would like todiscuss are the following:
1. A large company (the "Company") has (i)adopted a 401 (k) plan (the "Plan") for its employees in compliancewith section 401 of the Internal Revenue Code, (ii) established a trust to holdPlan assets, and (iii) appointed a trustee (the "Trustee") to managethe Plan.
2. Each Company employee may elect to contribute aportion of his or her salary to the Plan. Among the investment options that anemployee may elect under the Plan is an option that authorizes the Trustee touse a portion of such employee's contributions to purchase some of theCompany's publicly traded voting securities.
3. A Company senior executive (the"Executive") has contributed to the Plan for many years during whichhe has elected to authorize the Trustee to purchase Company voting securities.
4. The Executive has held for more than 5 years about 5%of the Company's voting securities worth in excess of $100 M. During that time,he has not acquired any Company securities in a reportable transaction under theHSR Act.
5. The Executive reaches 70 years of age, whichtriggers the requirement under the Plan and applicable IRS regulations for amandatory distribution to him by the Trustee. Electing to take a portion of thedistribution in Company securities (which is an option available under thePlan), the Executive receives from the Plan 5,000 shares of Company securitieswith a value of $100,000.
We are trying tounderstand how to apply FTC Rules 801.1(c), 801.15(a) and 802.35 while takinginto consideration the informal staff opinion that is located on the FTC'swebsite at http://wwwtlc.gov/opinions/0403015.htm. (A copy of the informal staff opinion is attached for your convenience.)
Please let us knowa convenient time for you and Janice when (redacted) and I can call youto discuss any HSR reporting requirements that would apply to the Trustee'sdistribution of Company stock to the Executive.