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Release Date: 08/18/2003
Release Number: 03-441
Contact Name: Gloria Della
Phone Number: 202.693.8664
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Washington, DC - The U.S. Department of Labor’s
Employee Benefits Security Administration (EBSA) today announced that it
has granted an exemption to allow Northwest Airlines, Inc. to contribute
stock of a regional airline affiliate in lieu of cash to its three defined
benefit pension plans. The exemption will be published in the August 19,
2003, Federal Register. |
Northwest
Airlines, Inc., headquartered in Eagan, Minnesota, sponsors the three
plans for 72,854 employees nationwide. The exemption allows Northwest to
make in-kind contributions to its plans of stock of Pinnacle Airlines
Corporation, a regional Northwest affiliate. |
The
Employee Retirement Income Security Act (ERISA) generally prohibits
in-kind contributions except under certain statutory exceptions or if the
Labor Department grants an exemption that protects the interests of
workers and retirees covered by the plan. The department has used its
exemption authority to grant relief for similar types of transactions in
the past. |
The
Labor Department proposed the Northwest exemption on January 17, 2003.
Since then, the department held two days of public hearings and reviewed
public comments before revising and ultimately granting the exemption.
Based on the input of interested parties and the adoption of additional
protections, the department found that the transactions would be in the
interest and protective of the pension plans’ workers and retirees. |
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An independent fiduciary has been retained by the
pension plans to establish the fair market value of the Pinnacle stock and
to determine that the stock is a prudent investment for the plans. The
plans will receive financial protections and governance rights as
negotiated by the independent fiduciary on their behalf. |
The
exemptions would permit: 1) in-kind contribution of shares of
Pinnacle Airlines stock to Northwest’s defined benefit plans; 2) holding
of the stock by the plans; 3) the sale of the stock by the plans to
Northwest; 4) the acquisition and exercise by the plans of a put option
granted by Northwest; and 5) the guaranty to the plans by Northwest
Airlines Corporation of Northwest’s obligation to honor the put option. |
Copies
of the individual exemption will be available on EBSA’s Web site at
www.dol.gov/ebsa. |
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U.S. Department of Labor
news releases are accessible on the Internet. The information in this news
release will be made available in alternate format upon request (large
print, Braille, audio tape or disc) from the Central Office for Assistive
Services and Technology. Please specify which news release when placing
your request. Call 202.693.7773 or TTY 202.693.7755. |
