Opinion ID: 3173601
Heading Depth: 2
Heading Rank: 3

Heading: The Amended Plan

Text: Following ERISA’s enactment, Marriott internally determined that the 1970 Plan was a top hat plan. Also, in 1978, Marriott altered the Retirement Awards in response to requests from management, particularly younger managers who did not like the long vesting period. Marriott responded by adding an option for employees to choose either a Retirement Award or an award that vested and was paid over a period of ten years during employment (a “Pre-Retirement Award”). After Marriott adopted the 1978 Plan, it drafted a lengthy Prospectus, which it mailed to all management employees eligible to receive Retirement Awards and filed with the Securities and Exchange Commission. The Prospectus described the Retirement Awards program and, in a section titled “ERISA,” disclosed the following: The Incentive Plan is an ‘employee pension benefit plan’ within the meaning of the Employee Retirement Income Security Act of 1974 (the ‘Act’). However, inasmuch as the Plan is unfunded and is maintained by the Company primarily for the purpose of providing deferred compensation for a selected group of management or highly compensated employees, it is 8 deemed a ‘select plan’ and thus is exempt from the participation and vesting, funding and fiduciary responsibility provisions of Parts 2, 3 and 4 respectively of Subtitle B of Title 1 of the Act. (J.A. 298). The Prospectus explained that Marriott “will not extend to participants any of the protective provisions of the Act for which an exemption may properly be claimed.” (J.A. 298). Additional prospectuses with this language were distributed in 1980, 1986, and 1991, and the Appellants do not dispute that they received them. In 1990, following an Advisory Opinion from the Department of Labor, supra note 1, Marriott amended the 1978 Plan to limit Retirement Awards to executive managers—those at pay grade 56 or above. Managers with a pay grade below 56 were eligible only for Pre-Retirement Awards. Marriott viewed such a change as “necessary in light of changing government interpretations of provisions in [ERISA],” and noted that by “narrowing” the circumstances of award availability “helps ensure the continued application of this favorable treatment under ERISA”. (J.A. 934).