As with any remuneration or benefit, the costs must be weighed against the potential benefit. First, there are no financial charges if there is no change of control. There are potential risks to consider: in the event of a breach in the parachute contract, a federal law provides additional protection beyond ordinary contract law, as provided for in the choice provision of the convention. These agreements are generally subject to the Employee Retirement Income Security Act (ERISA), 29 U.S.C§ 1001 et seq. ERISA treats the change in control agreements as precautionary plans for workers: as with all contractual transactions, the actual written provisions apply. Below is an example of a change in the definition of control: Although an investigation of the trust is not within the scope of this section, the executive should understand that it is possible that the amendment to the control agreement may be more applicable than anticipated. The ERISA component can have a huge influence on how the parachute payment is evaluated. In Buckhorn, Inc. vs. Ropak Corp., the Tribunal found that a double modification of the control payment was valid because “the Tribunal finds that this provision adequately promotes the interest of shareholders in retaining key positions in their current positions during a critical transition period, without over-entrenching management or overburdening Ropak.” 656 F.Supp.
209, at *232 to *233. However, the General Court annulled the adoption by the Management Board of the single-trigger amendment because it did not adequately respond to a threat of acquisition. The “double trigger” is more frequent and favors the company. This trigger presupposes a termination by the executive, without reason or rightly, and a payment period of one year generally defined. Unlike the individual trigger, the executive cannot resign voluntarily. Its participation in the existing and future company is imposed by the agreement. However, the executive still enjoys a great deal of protection, while the change of control takes place. The company will have a clear desire to maintain the loyalty and commitment of the leader and will reward the leader well at the end of the change of control. Such an outcome is attractive to ensure continuity and commitment of key personnel. To denounce the ERISA fiduciary scheme itself, the executive must first find that the modification of the control agreement is a charitable plan.
An `ERISA plan shall be drawn up where a reasonable person can determine, in environmental circumstances, the benefits envisaged [1], [2] a class of beneficiaries, [3] a source of funding and (4) the procedures for obtaining the benefits.` Purser v. ENRON Corp., 1988 WL 220238 to *3 (W.D.Pa.1988). Opinions differ on the impact of these agreements on the objectivity of the executive. Change control agreements generally provide an incentive for the director to act in the best interests of shareholders by eliminating distraction through control uncertainties resulting from a change in control that the director faces with respect to his or her compensation. . . .
