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Are remedies under the Employee Retirement Income Security Act (ERISA) available when a company owned by an employee stock ownership plan (ESOP) is drained by outsized compensation packages approved by officers and directors mired in self-dealing? Routine business decisions, such as compensation matters, at ESOP-owned companies are not typically scrutinized under ERISA. Rather, plan participants and beneficiaries who wish to take issue with the company’s business decisions are usually left with only those remedies available to shareholders under applicable corporate law. However, in Johnson v. Couturier, 2009 U.S. App. LEXIS 16559, the U.S. Court of Appeals for the Ninth Circuit concluded that ERISA’s fiduciary and self-dealing rules should apply in cases where an ESOP fiduciary who also serves as a corporate director or officer makes a business decision from which the individual could directly profit. This ruling could have widespread significance for ESOP participants and beneficiaries, as well as officers and directors of ESOP-owned organizations.

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