Tuesday, 16 July 2019 17:29

Wilson vs. Safelite Lawsuit Comes to an End Through Court of Appeals

Written by Emmariah Holcomb, glassBYTEs.com


The United States’ Sixth Circuit Court of Appeals three-judge panel ruled to dismiss Dan Wilson’s lawsuit which highlighted employee benefit plan issues at Safelite Group, Inc. (Safelite).

“This dispute centers on what constitutes an employee pension benefit plan under the Employee Retirement Income Security Act (ERISA), and its resolution determines whether the duties and protections of ERISA apply to the plan at issue. Wilson, the former president and CEO of Safelite, sued Safelite for breach of contract and negligent misrepresentation arising from the company’s alleged mismanagement of its deferred compensation plan for executive employees. Finding that the plan was an employee pension benefit plan under 29 U.S.C. § 1002(2) (A) (ii) and not a bonus plan exempted from ERISA under 29 C.F.R. § 2510.3-2(c), the district court granted Safelite’s motion for partial summary judgment,” a portion of the court’s decision reads.


The case began in 2016 when Wilson made sued his former employer for breach of contract.


Wilson was Safelite’s president and CEO of from 2003 to 2008, according to court documents. In 2005, the company’s board of directors created the Safelite Transaction Incentive Plan (TIP), which “provided for substantial bonus payments to its participants—five Safelite executives, including Wilson—if they secured a strategic buyer for the company,” according to court documents.


Things changed for the company in 2006, as it was acquired by Belron. According to court documents, Safelite came up with a solution to combat substantial TIP payments.


“Realizing that Belron’s acquisition would trigger significant payments under the TIP that could increase participants’ tax obligations, the board adopted the Safelite Group, Inc. nonqualified deferred compensation plan (Safelite Plan),” a portion of court documents reads.


The plan allowed participants to defer two types of income to avoid certain tax consequences. When the Safelite Plan was implemented, four executive employees that included Wilson, were eligible for it.


According to court documents, the two types of income that could be deferred were compensation and TIP amounts. An employee’s compensation was defined as the base annual salary and any annual or long-term bonuses; meanwhile, the TIP amounts were triggered by Safelite’s sale to Belron in 2006 for $334 million.

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