Written by attorneys · grounded in primary & secondary sources — see below
A trust established to hold assets and distribute pension and retirement benefits to current or former directors, officers, employees, and agents of a corporation or similar entity. Corporate statutes expressly authorize the creation of such trusts as part of broader powers to adopt benefit and incentive plans.
Sources & Authorities
How it applies
Common Examples
6
Corporation Funds Retired Manager Plan
MotorGrid adopted a written plan that placed assets into a pension trust to pay lifetime monthly benefits and annual share bonuses to Luis, a retired plant manager who later served as an independent sales representative. After a new board declared the plan ultra vires and attempted to rescind the benefits, Luis sued. The court rejected the ultra vires claim because the statute permitted the corporation to establish the pension trust for former employees and agents.
Corporation Creates Trust For Former Agents
TechForge established a pension trust funded by corporate assets to provide retirement annuities to its former sales agents, including contractor Dana who had coordinated regional accounts. When shareholders challenged the outlay as unauthorized, the board cited the statute. The court upheld the trust because the model act expressly permits pension trusts for current or former agents.
Select any source to read its text and confirm it supports the definition.
Model Codes
Dictionaries
Board Approves Officer Retirement Trust
Apex Industries transferred funds into a pension trust to pay lifetime benefits to retiring CFO Elena and two other officers. A dissident director sued claiming lack of power. The court sustained the trust, holding that MBCA § 3.02(l) grants express authority to create such plans for officers.
Company Extends Plan To Current Employees
Global Parts set up a pension trust covering current assembly-line employees and authorized matching contributions. After a merger the successor questioned the original board's power. The court confirmed validity under the statute's broad grant to adopt pension trusts for employees.
Entity Adds Profit-Sharing To Pension Trust
Metro Services placed assets in a pension trust that also funded a share-bonus feature for long-term drivers. Minority owners objected that the combined plan exceeded corporate power. The court upheld the arrangement because the statute authorizes pension trusts together with incentive plans.
Nonprofit Forms Parallel Pension Trust
Charity Network created a pension trust to deliver retirement income to its former program directors. A state regulator claimed the entity lacked authority. The court rejected the challenge, noting the model act language applies to any corporation empowered to adopt such trusts.
Common questions
Frequently Asked
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Does a corporation have statutory authority to establish a pension trust for former employees?+
Yes. Model Business Corporation Act section 3.02(l) expressly grants corporations the power to pay pensions and establish pension trusts for any or all of their current or former directors, officers, employees, and agents. This authority covers both current and former personnel and extends to agents as well as employees.
Supporting sources
Can a corporation include independent contractors or agents in a pension trust plan?+
Yes. The statute authorizes benefit plans for agents in addition to employees. Individuals who perform services on behalf of the corporation under its direction, even if they also work for other clients, may qualify as agents eligible for inclusion in a pension trust or incentive plan.
Supporting sources
Does extending a pension trust plan to repeat freelancers exceed corporate power?+
It depends on whether the freelancers qualify as agents. Repeated engagements with direction and integration into corporate operations can establish agency status, bringing the individuals within the statute's coverage. Lack of formal appointment and divided loyalties with other clients may weigh against agency status.
Supporting sources
Is a pension trust plan ultra vires if it covers government employees working inside the corporation?+
No. The statute permits plans for agents regardless of whether they are also employed by another entity such as a government agency. Liaison officers who coordinate operations on site and act on the corporation's behalf fall within the authorized categories.
Supporting sources
512 U.S. 374, 114 S.Ct. 2309, 129 L.Ed.2d 304Property
…As recently as last Term, we approved the principle again. See Concrete Pipe & Products of Cal., Inc. v. Construction Laborers Pension Trust for Southern Cal. , 508 U. S. 602, 644 (1993) (explaining that "a claimant's parcel of property [cannot] first be divided into what was taken and what was left" to demonstrate a compensable…
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