Kelly Milligan v. Merrill Lynch, Pierce, Fenner & Smith, Inc.
Split Score
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Case Summary
Disposition
Affirmed
The Fourth Circuit held that Merrill Lynch’s WealthChoice Award program, which offers high-performing financial advisors a lump-sum award that vests after eight years if employment continues, is an exempt bonus plan and not an "employee pension benefit plan" under ERISA. Accordingly, the court affirmed summary judgment for Merrill Lynch, rejecting the plaintiff’s ERISA claims.
Circuit Split Identified
Legal Issue
Whether employer incentive/retention bonus programs like Merrill Lynch's WealthChoice Awards qualify as an "employee pension benefit plan" under ERISA or are exempt bonus plans under 29 C.F.R. § 2510.3-2(c).
Circuit Positions
Such incentive/phantom stock/retention award programs are exempt bonus plans and not "employee pension benefit plans" under ERISA.
Such plans constitute ERISA-covered employee pension benefit plans because they defer compensation until separation or retirement.
Conflict Summary
Several circuits (3d, 4th, 8th, 9th, and 10th) have held that long-term incentive or phantom-stock style awards designed to encourage retention and performance are exempt "bonus" plans and therefore fall outside ERISA. The Fifth Circuit, by contrast, has ruled that similar plans requiring or permitting compensation deferral constitute ERISA-covered pension plans because they defer income to termination or beyond.