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M&T Bank names two to CNY Directors Advisory Council
SYRACUSE, N.Y. — M&T Bank recently appointed Alicia Dicks and Sheena Solomon to its Directors Advisory Council for the Central New York region. This 11-member council meets regularly to discuss business, customer, and community issues and provides insights to support M&T’s ongoing efforts to develop locally customized solutions and service models, the bank said in […]
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SYRACUSE, N.Y. — M&T Bank recently appointed Alicia Dicks and Sheena Solomon to its Directors Advisory Council for the Central New York region.
This 11-member council meets regularly to discuss business, customer, and community issues and provides insights to support M&T’s ongoing efforts to develop locally customized solutions and service models, the bank said in a news release.
Dicks is president and CEO of the Community Foundation of Herkimer and Oneida Counties, an organization with stewardship over more than $175 million in charitable community assets. She is deeply involved in Utica and the Mohawk Valley, sharing her expertise to foster inclusive growth and positive change.
Solomon is the executive director of the Gifford Foundation. Under her leadership, the Gifford Foundation is creating lasting community change and advancing racial justice and equity through various projects, M&T Bank said.
“M&T’s Central New York Directors Advisory Council plays an important role in helping us to ensure the bank is consistently making a difference in people’s lives throughout our region. The local business and community leaders on our board care deeply about Central New York and the Mohawk Valley. Working together, we identify new and different ways to uplift our communities and strengthen the local economy,” M&T Bank Regional President Steve Gorczynski said.
“I’m incredibly excited Alicia Dicks and Sheena Solomon have decided to join the council,” he added. “For years, they have worked tirelessly to advance social justice and racial equity, creating positive change through major initiatives and everyday moments to lend support. Their perspectives and insights will help inform and augment our enduring commitment to meet the changing needs of our community.”
In addition to Solomon and Dicks, M&T Bank’s Directors Advisory Council for the Central New York region consists of J. Andrew Breuer, president of Hueber-Breuer Construction; Me’Shae Brooks-Rolling, franchise owner of EventPrep Inc. and executive director of the Upstate Minority Economic Alliance; Mara Charlamb, VP and owner of United Radio; James A. Fox, managing director and president of Ramboll Group; Karyn Korteling, owner of Pastabilities; Joseph Mancuso, partner at Hancock & Estabrook LLP; Scott Shatraw, president of Utica First Insurance; Meg Tidd, CEO of VIP Structures; and Melissa Zell of The Pioneer Companies.
M&T Bank has 41 offices and employs nearly 360 people in its Central New York region, which covers Onondaga, Cayuga, Oswego, Madison, Herkimer, Jefferson, Lewis, Oneida, and Seneca Counties. It operates a regional headquarters on South Clinton Street in downtown Syracuse. M&T says it holds the region’s highest deposit share and is the top Small Business Administration (SBA) lender in Central New York. Each year, the bank also contributes more than $1 million to dozens of nonprofit organizations in the Central New York region.
Crouse to offer path to nuclear-medicine technologist certification
SYRACUSE, N.Y. — Crouse Health is partnering with a Massachusetts college to provide local health professionals a chance to become a certified nuclear-medicine technologist. Crouse is working on the initiative with the School of Nuclear Medicine at the Massachusetts College of Pharmacy and Health Sciences (MSCPHS) in Boston. The 12 to 14-month program is designed
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SYRACUSE, N.Y. — Crouse Health is partnering with a Massachusetts college to provide local health professionals a chance to become a certified nuclear-medicine technologist.
Crouse is working on the initiative with the School of Nuclear Medicine at the Massachusetts College of Pharmacy and Health Sciences (MSCPHS) in Boston.
The 12 to 14-month program is designed for students located in the upstate New York region who hold an associate degree in medical imaging or a bachelor’s degree “in any field,” Crouse Health said in a release.
The program builds on previous college studies, preparing participants to become a board-certified nuclear-medicine technologist licensed in New York State for the practice of nuclear-medicine technology. It also teaches participants how to “safely and compassionately” administer radioactive drugs, or radiopharmaceuticals, to patients.
Those taking part will complete course work online through MSCPHS, with Crouse Hospital providing clinical training. Crouse is one of three hospitals in New York state to participate in the program, the organization said.
Students will learn how to obtain rapid-succession images of where radiopharmaceuticals concentrate in the body, giving the medical team insight that’s essential to diagnosing patients. Students will also discover the functions of the many organs and tissues found in the human anatomy and learn how to treat several medical conditions using targeted radiation, per the release.
“We’re excited to partner with MSCPHS on this innovative educational and clinical opportunity,” Brad Hellwig, director of medical imaging at Crouse Health, said.
Students will follow a synchronous distance/online class schedule, offering the flexibility of online education coupled with the community-building experience associated with classroom learning, according to Crouse Health.
“Program participants will work alongside industry experts and gain firsthand knowledge of what it’s like to be a nuclear-medicine technologist,” Hellwig added.
Cayuga Health buys space at The Shops at Ithaca Mall
LANSING, N.Y. — Cayuga Health plans to redevelop the former retail space at The Shops at Ithaca Mall into a new mixed-use health-care facility. Plans will also include the development of a new health-education center in partnership with Cornell University, Ithaca College, and Tompkins Cortland Community College. The health-care system on March 15 announced that
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LANSING, N.Y. — Cayuga Health plans to redevelop the former retail space at The Shops at Ithaca Mall into a new mixed-use health-care facility.
Plans will also include the development of a new health-education center in partnership with Cornell University, Ithaca College, and Tompkins Cortland Community College.
The health-care system on March 15 announced that it bought 108,000 square feet of space at The Shops at Ithaca Mall and proposes to redevelop, relocate, and consolidate existing medical practices into one location.
The organization says it spent $8.5 million to acquire the former big-box retail parcels where Bon Ton and Sears previously operated, per its news release.
Cayuga Health contends the move is “making access more convenient for patients.” The health system plans to lease some of the space to prospective new vendors as well.
The Shops at Ithaca Mall is located at 40 Catherwood Road, near Route 13 in the village of Lansing.
“We see this capital expansion as a necessary next step in our strategic plan as we continue to reimagine our operations by making health care more accessible to everyone in the communities we serve,” Dr. Martin Stallone, president & CEO of Cayuga Health, said in the release. “This acquisition allows us to consolidate existing practices into one location for efficiency and improved patient access. We have been operating at The Shops at Ithaca Mall since the onset of the COVID-19 pandemic and it has been proven to be a valuable location within the community and for our health system.”
Cayuga Health acquired the property from an ownership group that includes Mason Asset Management and Namdar Realty Group, two Long Island–based real-estate investment companies that oversee leasing and management efforts at the mall.
“We are thrilled to welcome Cayuga Health as a permanent fixture of The Shops at Ithaca,” said Elliot Nassim, president at Mason Asset Management, which is responsible for leasing efforts at the mall. “Our team has worked closely with Cayuga Health over the last few years and is excited to see that relationship we’ve built come to fruition in a way that will benefit the community and create a mixed-used shopping experience offering convenience for many people.”
Cayuga Health has retained HOLT Architects of Ithaca to lead the redevelopment plans for the newly acquired space. Renderings of the designs will be on display at The Shops of Ithaca Mall for anyone interested in seeing the new capital-project planning.
“Malls around America were a beacon of success for decades, unfortunately with increased globalization and ecommerce they have seen a decline,” Tom LiVigne, chairman of the Cayuga Health board of directors, said. “Adapting and reusing big-box retail space like this supports our local economy, including The Shops at Ithaca Mall, by driving increased foot traffic to the businesses remaining and prospects.”
Cayuga Health has been occupying the retail space since March 2020 when it identified the facility as an “ideal location for critical” COVID-19 operations.
Its partnership started with the opening of a mass drive-through COVID testing center, which “proved to be essential during the height of pandemic.” The partnership expanded with an indoor vaccination clinic (the previous Sears location), occupying 200,000 square feet when the vaccines became available for distribution.
Willie’s opens new café location in Utica
UTICA , N.Y.— After five years with just one location, Willie’s Bagel Café is bringing its New York City–style bagels to even more people with a second location in the former Patio Drive-In property on Oriskany Street. Willie’s Gourmet Cafe, which opened in early March, fulfills a longtime dream for owner William Rodriguez, who always
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UTICA , N.Y.— After five years with just one location, Willie’s Bagel Café is bringing its New York City–style bagels to even more people with a second location in the former Patio Drive-In property on Oriskany Street.
Willie’s Gourmet Cafe, which opened in early March, fulfills a longtime dream for owner William Rodriguez, who always wanted a location on Oriskany Street, says his son Ronny, who manages the new café.
When Patio Drive-In owner Lawrence Gurdo decided to retire and sell the building last summer, Rodriguez says he jumped on the opportunity. According to online real-estate records, Rodriguez purchased the property and its 2,532-square-foot building for $265,000.
The first Willie’s Bagel Café opened in 2016 and has done well, Rodriguez says. The location at 219 North Genesee St., however, is a little out of the way for some customers. Close to the Thruway and a number of hotels nearby, that café does a brisk business with travelers looking to grab a quick breakfast or lunch to go.
The new Willie’s Bagel Café at 1401 Oriskany St. still offers meals to go, but also has something the original spot doesn’t.
“The biggest difference is dining in,” Rodriguez says. The new café features a large dining area where customers can sit and enjoy their meal. It’s a great fit for the more residential neighborhood, he says.
It is also a prime location to serve employees at the Wynn Hospital of the Mohawk Valley Health System once it opens just a short drive away. Projected to open in 2023, the hospital will employ about 3,000 to 3,500 people.
“It’s a place for families to gather and co-workers to come to lunch together,” Rodriguez says.
The Oriskany Street site is one that’s important to many people who live in the area and were used to visiting the Patio throughout its 65 years in business. Rodriguez is proud that they have brought back an option for breakfast and lunch to people in the neighborhood.
There are several competitors nearby, including a Dunkin’ Donuts just a few blocks away, but Rodriguez isn’t worried.
“What sets us apart in general is we provide New York City bagels to Central New York,” he says. Willie’s also offers Boar’s Head brand meats for its sandwiches. “For any NYC natives, that’s a big deal,” Rodriguez notes.
On top of the bagel recipe perfected by his father — who ran a bagel shop on Long Island for 20 years — the freshness of their food sets them apart. “You can see us cooking,” Rodriguez says.
Both locations serve a variety of bagels including seasonally colored bagels, flavored cream cheeses made in house, wraps, sandwiches, salads, soups, pastries, and more. Many of the sandwiches are named after family members, and those same family members help run the family-oriented business.
Willie’s Bagel Café was fortunate through the pandemic to still do well, Rodriguez says. But now that cases have been dropping, he’s excited to welcome both old and new customers to the new location where they can relax and dine in. To help facilitate things, they invested in a pager system so customers can place their order and find a table while they wait. Just in case the COVID landscape changes yet again, the new café has a pick-up window it can use if the need arises, Rodriguez says.
Next on the agenda for the new Willie’s Bagel Café is an addition of a conference room. “We want to build a conference room with a projector where people can host their meetings here,” he says.
Federal-spending plan includes funding for Syracuse projects
SYRACUSE, N.Y. — Construction-job training efforts and police-body cameras are earmarked for federal funding in the recently signed fiscal year 2022 spending plan. That’s according to U.S. Senate Majority Leader Charles Schumer (D–N.Y.) and U.S. Senator Kirsten Gillibrand (D–N.Y.), who announced the funding March 10. President Joe Biden signed the measure into law March 15
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SYRACUSE, N.Y. — Construction-job training efforts and police-body cameras are earmarked for federal funding in the recently signed fiscal year 2022 spending plan.
That’s according to U.S. Senate Majority Leader Charles Schumer (D–N.Y.) and U.S. Senator Kirsten Gillibrand (D–N.Y.), who announced the funding March 10.
President Joe Biden signed the measure into law March 15 after both the U.S. Senate and U.S. House of Representatives approved the spending bill days earlier. It funds the federal government for the current fiscal year, which started back in October.
The Syracuse projects include $300,000 for the Syracuse Build initiative to train Syracuse youth for construction jobs with the Interstate 81 (I-81) viaduct-replacement project, the lawmakers said.
The federal plan will also provide $1 million to help Syracuse’s Resurgent Neighborhoods Initiative to build 50 new homes for income-qualified homeowners, and 150 rental units.
In addition, $3 million is set aside to help pay for the construction and renovation of the new Catholic Charities of Syracuse Housing Services Center for emergency homeless housing and mental-health services.
Besides the construction-related projects, the City of Syracuse and Syracuse Police Department will get $140,000 to continue efforts to equip all uniform officers and supervisors with body-worn cameras, the lawmakers said.
Additional project details
Schumer and Gillibrand explained that the $300,000 they secured for I-81 construction-job training will help young people who are not enrolled in school or participating in the formal labor market get the support and training they need to start careers in construction, specifically working with the I-81 redevelopment project.
Last year, the lawmakers brought Transportation Secretary Pete Buttigieg to Syracuse to visit I-81 and to push for the use of a local-hire program to connect “disadvantaged workers, including disadvantaged young people,” to construction jobs created by the I-81 project, Schumer’s office said.
The senators were able to eventually include a permanent local hire program in the Infrastructure Investment & Jobs law.
Syracuse’s Resurgent Neighborhoods Initiative will use the $1 million to bolster the city’s ongoing project to increase the city’s inventory of “quality, affordable” homes. Specifically, the funding will help pay to build the final 19 of 50 planned homes.
In addition to their joint requests, Schumer personally secured $3 million for the construction and renovation of the new Catholic Charities Housing Services Center, his office said. It will include an 80-bed emergency shelter for homeless men.
The new facility is expected to include six apartments for homeless men who are either living on the streets or in a shelter. It will also offer on-site health and mental-health services, case management, a job training program, and will establish a large office space for the Catholic Charities staff who are currently spread out throughout Syracuse.
Besides the construction-related projects, the proposal also offers $140,000 to outfit the remaining 14 uniformed sergeants of the Syracuse Police Department with body-worn cameras, “promoting public safety and accountability.”
In recent years, the City of Syracuse and Syracuse Police Department have worked to equip the majority of their uniformed police officers with body-worn cameras. This expansion will put body-worn cameras on all uniformed officers and supervisors, Schumer’s office said.
Cornish becomes 10th president of Ithaca College
ITHACA, N.Y. — Since her arrival at Ithaca College as provost, La Jerne Terry Cornish has played a significant role in decision-making processes targeting the school’s academic direction. That includes the launch of the physician-assistant studies graduate program and the recently announced creation of the School of Music, Theatre, and Dance, Ithaca College said. Cornish
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ITHACA, N.Y. — Since her arrival at Ithaca College as provost, La Jerne Terry Cornish has played a significant role in decision-making processes targeting the school’s academic direction.
That includes the launch of the physician-assistant studies graduate program and the recently announced creation of the School of Music, Theatre, and Dance, Ithaca College said.
Cornish had also been leading the college as interim president since Aug. 30. The interim tag is now gone as the Ithaca College board of trustees on March 7 announced Cornish would become the college’s 10th president.
She assumed the role of interim president following the departure of Shirley Collado who accepted a job as president and CEO of College Track, which is described as a college-completion program.
In an announcement to the campus community, David Lissy, chairman of the Ithaca College board of trustees, said that Cornish “has the character, the fortitude, and the passion to lead the institution at this important, transformational moment,” per the school’s news release.
“Her appointment ensures a seamless transition and unimpeded progress in advancing the college’s vision, mission, and values,” Lissy said. “Building on the foundation and the momentum of the Ithaca Forever strategic plan, Dr. Cornish represents a new era of leadership for the college. She has a thorough grasp of the challenges before us and is ready to work collaboratively with the members of the IC community on campus and around the world to ensure that we lean into the significant opportunities that we have to secure a bright future for Ithaca College.”
Cornish joined Ithaca College as provost and senior VP for academic affairs in July 2018 and was later named provost and executive VP. Prior to joining Ithaca College, Cornish taught at Goucher College in Baltimore, Maryland and served from 2014-18 as associate provost for undergraduate studies.
“I feel honored and blessed to have been chosen as the 10th president of Ithaca College, and I wish to thank the board of trustees, the presidential search committee, and our Ithaca College community for your trust in my leadership,” Cornish said. “This is a time of challenge but also of opportunity for the college. Together — with our commitment to the IC student experience firmly centered as our guide — we will move our college ever forward as we work to realize our vision to become a global destination for bold thinkers seeking to build thriving communities.”
Lissy thanked the presidential search committee for its diligence in conducting a “thorough and comprehensive” five-month national search.
VIEWPOINT: Seniors’ use of smart phones, computers is on the rise
It turns out that you can teach an old dog new tricks. Just look at how America’s seniors have adopted cellphones, computers, and laptops. Middle-age children of today’s seniors may soon start complaining that their moms and dads are spending too much time online and on their iPhones, says Rebecca Weber, CEO of the Association of
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It turns out that you can teach an old dog new tricks. Just look at how America’s seniors have adopted cellphones, computers, and laptops. Middle-age children of today’s seniors may soon start complaining that their moms and dads are spending too much time online and on their iPhones, says Rebecca Weber, CEO of the Association of Mature American Citizens (AMAC).
She notes that the 50-plus set has been adopting technology at a steady rate for years now, but the COVID pandemic has speeded things up. A Pew Research study, she points out, shows that 73 percent of the 50-64 age group and 45 percent of Americans 65 and older are familiar with and use social-media sites.
Meanwhile, the Infocomm Media Development Authority (IMDA) tells us that a 2016 survey of seniors 75 years of age and older showed that just 11 percent of them were using smart phones. The same survey conducted in 2020 showed that senior smart-phone usage had skyrocketed to 60 percent. The survey showed that only eight percent of 75-plus seniors were familiar with and used the Internet in 2016. [However] by 2020, 46 percent of super seniors were regularly online.
A lot of research has been conducted regarding the “hows” and “whys” of technology adoption among the elderly, according to the Journal of Geriatric Mental Health. They show that, “once their initial resistance of learning new technology was overcome — ‘enjoying the experience’ of using the mobile phone motivated them to use the device. Other contributory factors were ‘heightened self-esteem’ when they could perform certain chores by themselves, such as paying bills, buying groceries, or navigating around, and ‘feeling secure’ (because of various safety measures available on the cell phone), as well as more realistic, goal-directed outcomes such as information retrieval and communication. In addition, social influence or subjective norm in the theory of reasoned action research also influenced the use of mobile phones. Other studies too have identified different possible motivators for senior mobile-phone use, including social influence, safety, security, autonomy, relatedness, and usefulness.”
Ageists will tell you that the elderly are not capable of navigating the intricate pathways of computer and smart-phone communication. It’s not true. In a scholarly paper by Morgan Van Vleck, a master’s research fellow in aging at Harvey A. Friedman Center for Aging at Washington University in St. Louis, Missouri, argues that the use of social media and technology by seniors is a welcoming development.
“The growing intergenerational nature of social media has been beneficial in allowing a place for people to build relationships based on common interests rather than age. The future of social media is an intergenerational one, with the aging population only set to increase. Instead of viewing a growing social media use among older adults as the “death” of these sites, it should be viewed as an avenue for possibility that arises when everyone is given a platform,” Van Vleck says.
John Grimaldi writes for the Association of Mature American Citizens (AMAC), a senior-advocacy organization with 2.4 million members. He also is a founding member of the board of directors of Priva Technologies, Inc.
Westbrooks to start as Cornell University librarian on July 1
ITHACA, N.Y. — Cornell University has named Elaine L. Westbrooks as its next university librarian, starting July 1. Cornell Provost Michael Kotlikoff appointed, and the Cornell Board of Trustees approved, Westbrooks as the Carl A. Kroch University Librarian, according to a news release on the Cornell Chronicle website. Westbrooks is currently vice provost and university
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ITHACA, N.Y. — Cornell University has named Elaine L. Westbrooks as its next university librarian, starting July 1.
Cornell Provost Michael Kotlikoff appointed, and the Cornell Board of Trustees approved, Westbrooks as the Carl A. Kroch University Librarian, according to a news release on the Cornell Chronicle website. Westbrooks is currently vice provost and university librarian at the University of North Carolina at Chapel Hill.
This marks a return to Cornell for Westbrooks, who previously worked at the university as a metadata librarian for eight years.
“Elaine has the knowledge, experience, and passion to ensure that a world-class research university with a global reach like Cornell has the library it depends on,” Kotlikoff contended. “Under her leadership, Cornell University Library and Cornell University Press will continue to thrive in the digital age.”
In her role at the University of North Carolina, Westbrooks oversees a library system that includes 10 libraries, nearly 10 million volumes, and 300 librarians, archivists, and staff members.
“I’m passionate about creating a better world,” she said. “I’m passionate about the important role that libraries play in democracy, and the important roles that the library plays in advancing the mission of a university like Cornell: a land-grant, an Ivy, a New York state school, all the special things about Cornell; you have to have a great library. And a library can’t be great if it’s not truly committed to being the best library it can be for everybody.”
At Cornell, Westbrooks plans to focus on ensuring that the library has and can retain a skilled, knowledgeable workforce that is diverse and inclusive. She also aims to ensure the library continues in this digital age to get information and primary resources into the hands of people who need them the most — researchers, students, and citizens.
Westbrooks succeeds Gerald R. Beasley, Cornell’s 12th university librarian, who announced in April 2021 that he would not seek to renew his five-year term, which ends July 31. During the transition, Beasley has been focused on his research efforts on the changing roles of academic libraries, and Senior Vice Provost Judy Appleton has overseen library operations.
The university librarian at Cornell is the chief academic and administrative officer for the library and the press, overseeing a combined budget of about $69 million and about 350 staff members. Cornell University Library houses more than 8 million volumes, as well as millions of electronic resources in 20 constituent libraries in Ithaca and New York City.
Westbrook’s experience
Westbrooks served as metadata librarian, then senior metadata librarian at Cornell’s Albert R. Mann Library from 2000-2006. She then led metadata services for Cornell University Library until 2008. Westbrooks went on to hold leadership positions at the University of Nebraska at Lincoln and the University of Michigan, before moving onto North Carolina in 2017.
Westbrooks holds a bachelor’s degree in linguistics and a master’s degree in library and information science from University of Pittsburgh. Westbrooks is the co-editor of three books: “Metadata in Practice” with Diane Hillmann, “Metadata and Digital Collections: A Festschrift in Honor of Tom Turner” with Keith Jenkins, and “Academic Library Management: Case Studies” with Tammy Nickelson Dearie and Michael Meth.
Wells College names Henking VP of academic & student affairs
AURORA, N.Y. — Wells College has appointed Susan Henking as its new VP for academic and student affairs. Henking, who starts her position on July 1, was selected after a comprehensive national search that began last fall. She succeeds Cindy J. Speaker, provost and dean of the college, who will be leaving Wells at the
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AURORA, N.Y. — Wells College has appointed Susan Henking as its new VP for academic and student affairs.
Henking, who starts her position on July 1, was selected after a comprehensive national search that began last fall. She succeeds Cindy J. Speaker, provost and dean of the college, who will be leaving Wells at the end of this academic year, according to a March 3 news release from the college.
Henking is a teacher–scholar in religious studies whose work has focused on cultural understandings of American religion, as well as the theoretical and conceptual relation of religion to gender and sexuality.
For more than 25 years, she taught in the Department of Religious Studies at Hobart and William Smith (HWS) Colleges and was named professor emerita of religious studies in 2015. During her time at HWS, Henking also served in numerous other roles, including multiple stints as department chair; interim dean of the faculty (1998–2000); and acting provost and dean of the faculty (2000–01). She also co-founded Hobart and William Smith’s LGBT studies program, the first standalone program of its kind in the country, and served as its chair for more than a decade.
In 2012, Henking became president and CEO of Shimer College, a small college then located on the south side of Chicago which became part of Naperville’s North Central College in 2017. In 2017, she was named president emerita and also received an honorary doctorate in recognition of her service to the institution. From 2019-2021, Henking served as interim VP of academic affairs and student affairs, and later president, at Salem Academy and College, one of the oldest women’s colleges in the U.S.
“Dr. Henking’s leadership style and career path make her an exemplary choice for Wells College,” Jonathan Gibralter, president of Wells College, said. “As a seasoned faculty member who has held a wide variety of leadership roles, she is well prepared to meet the specific needs of our College and its entire community.”
Henking earned a bachelor’s degree in religion and sociology from Duke University. She later earned her master’s degree at the University of Chicago Divinity School, where she also obtained her Ph.D. in religion and psychological studies.
Wells College is a private, coeducational liberal-arts college located in Aurora, on the eastern shore of Cayuga Lake. It has dozens of majors and minors available in the sciences, arts, humanities, and pre-professional programs.
VIEWPOINT: Important Recent ESOP Developments
We saw several significant legal developments relating to employee stock-ownership plans (ESOPs) last year. This article will summarize a few of the most important developments. Fiduciary Indemnification and Insurance — Scalia v. Professional Fiduciary Services, LLC Fiduciaries of benefit plans covered by the Employee Retirement Income Security Act of 1974 (ERISA), including ESOPs, are subject to personal liability
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We saw several significant legal developments relating to employee stock-ownership plans (ESOPs) last year. This article will summarize a few of the most important developments.
Fiduciary Indemnification and Insurance — Scalia v. Professional Fiduciary Services, LLC
Fiduciaries of benefit plans covered by the Employee Retirement Income Security Act of 1974 (ERISA), including ESOPs, are subject to personal liability if they breach their fiduciary duties to the plan participants. Consequently, trustees and other ESOP fiduciaries often try to protect themselves by securing fiduciary-liability insurance or indemnification commitments from the plan sponsor or others. However, the protection that fiduciary insurance and indemnification agreements can provide is limited by Section 410 of ERISA.
ERISA section 410 and the related Department of Labor (DOL) regulation provide as follows:
General rule: An agreement that purports to relieve a fiduciary from fiduciary responsibility is void as against public policy.
Fiduciary-liability insurance: But Section 410 does not preclude a fiduciary from purchasing insurance to cover fiduciary liability nor does it, generally, prohibit the plan sponsor from purchasing such insurance for a fiduciary’s benefit.
Indemnification agreements. Regarding agreements to indemnify a plan fiduciary:
The plan itself can never indemnify a fiduciary for a fiduciary breach — that would amount to an agreement to relieve the fiduciary from responsibility and would be void under the general rule.
However, an indemnification agreement that leaves the fiduciary fully responsible but permits another party to satisfy any fiduciary liability, in the same manner as insurance, is usually permissible. The DOL regulation states specifically that the plan sponsor or an affiliate of the sponsor can indemnify a fiduciary in this manner.
Beyond these basic principles, however, the scope of permissible fiduciary-liability insurance and indemnification agreements in the ESOP context is uncertain. For example, although the DOL’s regulation under Section 410 permits a plan sponsor to indemnify a trustee or other plan fiduciary, two different federal courts held in 2009 that an ESOP trustee cannot be indemnified by the ESOP sponsor if the indemnity funds will come from the sponsor’s assets. The courts pointed out that, because the ESOP owned all or a significant part of the sponsor’s shares in these cases, permitting the sponsor to indemnify the fiduciary would indirectly harm ESOP participants. However, in a later decision, a different court refused to invalidate an agreement by an ESOP sponsor to indemnify the trustee and advance the trustee’s defense costs, where the agreement prohibited indemnification in the event of a final court judgment finding that the trustee had breached its fiduciary duties.
So, it’s not clear whether or to what extent an ESOP sponsor can agree to indemnify the trustee from fiduciary liability. In this uncertain legal environment, the DOL now appears to have staked out an aggressive position. In a 2021 settlement agreement with an ESOP trustee involving alleged fiduciary breaches, the DOL required that the fiduciary agree not to accept indemnification from fiduciary liability from any company owned, in whole or in part, by an ERISA plan — such as a partly ESOP-owned company. The DOL’s position appears to be that even a company partly owned by an ESOP cannot indemnify the ESOP trustee or another fiduciary of the plan, presumably for the reasons relied on in the two 2009 court decisions — the indemnification funds would come from an indirect asset of the plan.
It remains to be seen whether the DOL will take the same position in future lawsuits alleging breaches of fiduciary duty by ESOP trustees, but this appears likely. If that happens, ESOP trustees and fiduciaries will have to assess how this affects their ability to be protected from fiduciary liability.
Valuation of Private Company Shares (Walsh v. Bowers)
In Walsh v. Bowers, a federal district court ruled that the DOL had failed to prove that the sale of a closely held corporation’s stock to an ESOP constituted violations of the ERISA fiduciary duty and prohibited transaction rules. The DOL had sued the ESOP’s fiduciaries, alleging that they had violated these ERISA rules by causing the ESOP to pay more than fair-market value for shares purchased from the plan sponsor’s founders. However, the court sided with the fiduciaries, and in her published opinion, Judge Mollway discussed and analyzed several important issues regarding the valuation of closely held shares in ESOP transactions. In particular, the court discussed whether management’s financial projections were appropriately vetted by the independent ESOP fiduciaries, analyzed the effect on the appraised share value of an earlier third-party purchase offer, and considered whether the speed with which the sale transaction was completed indicated an inadequate fiduciary process.
Background — Share valuations in private ESOP transactions
Walsh v. Bowers involved a private-company-leveraged ESOP transaction, in which the company’s owners sell shares to a new or existing ESOP in exchange for a promissory note. The note is secured by the purchased shares, which are held by the plan in a “suspense account” and released to participants’ accounts only as the note is paid off. Usually, the ESOP pays back the note with contributions by the plan sponsor.
These transactions are subject to several strict rules and requirements under ERISA and the Internal Revenue Code (IRC). Most importantly, the “prohibited transaction” and fiduciary duty rules under ERISA and the IRC mandate that the ESOP pay no more than fair-market value for the purchased shares, as determined in good faith by the ESOP trustee or other named fiduciary.
A separate IRC rule requires that the value of shares purchased by an ESOP must initially be determined by an independent appraiser. However, courts have consistently held that the ESOP trustee or other independent fiduciary cannot simply adopt the appraiser’s valuation without further examination. One court explained this principle as follows:
Expert advice, like an advisor’s independent valuation, can of course serve as evidence of prudence in the discharge of an ESOP trustee’s duties under [ERISA] … But such advice “is not a magic wand that fiduciaries may simply wave over a transaction to ensure that their responsibilities are fulfilled.” Rather, a plan trustee must at least show that it (1) investigate[d] the expert’s qualifications, (2) provide[d] the expert with complete and accurate information, and (3) [made] certain that reliance on the expert’s advice was reasonably justified under the circumstances.
The most-common valuation issues
Whether ESOP fiduciaries have fulfilled this basic duty has been the subject of numerous lawsuits and DOL investigations. The allegation most frequently made in these actions is that the shares purchased by an ESOP were overvalued, to the benefit of the selling shareholders and the detriment of ESOP participants.
The most-common violations in these cases are:
• Unrealistic or otherwise improper financial projections;
• Improper valuation methodology;
• Use of inappropriate “guideline companies” (guideline companies are public companies that the independent appraiser uses to value closely held shares because they are viewed as comparable to the private company);
• Use of imprudent or otherwise improper fiduciary processes;
• Failure to prudently monitor the independent appraiser;
• Conflicts of interest;
• Inappropriate use of a “control premium” (a control premium, as its name suggests, is a surcharge added to a tentatively determined share value to account for the fact that the acquisition will give the ESOP control of the company); and
• Failure to consider third-party purchase offers for the shares.
The court’s ruling
In Walsh v. Bowers, the court held that the sale of 100 percent of an engineering firm’s shares to a newly formed ESOP did not violate ERISA, rejecting the DOL’s allegations that the $40 million purchase price was almost 50 percent higher than the shares’ fair-market value. In holding for the ESOP fiduciaries, the court made the following points:
Management projections. As required by the IRC, the ESOP trustee retained an independent appraiser to value the shares. The appraiser used three different methods to value the shares and then computed a blended average of the three resulting values. The DOL challenged all three values, but the agency especially objected to the way in which the “discounted cash flow” methodology was used. The appraiser used financial projections provided by the company’s management, including (the agency alleged) projected cash flow of about $9.3 million for 2012, the year of the ESOP purchase. The $9.3 million estimate was more than four times higher than the company’s average cash flow for the four preceding years, and actual 2012 cash flow turned out to be only about $7 million. Despite these troubling facts, the court ruled that the DOL had not proven that the allegedly flawed projections were unreasonable or that they had produced an inflated share value, noting that the government’s own valuation expert made several significant errors in its analysis and that the revenue projection for 2012 was justified by certain profitable contracts that the company had “in the pipeline” and which the government’s valuation expert wrongly ignored.
Earlier purchase offer. The court also held that an expression of interest by a potential third-party purchaser of the shares, less than a year before the ESOP transaction closed and at a much lower price ($15 million plus cash on hand), was largely irrelevant to the share’s value because it was not a firm offer and was contradicted by other evidence of the share’s higher value.
The rush to close the deal. The DOL also argued that the parties had closed the ESOP transaction in less than four months and that the negotiations between the shareholders and the ESOP regarding the purchase price lasted only three days. However, the court noted that the company had retained experienced counsel and that the independent trustee had properly completed a “due diligence” investigation of the company and saved the ESOP millions of dollars by negotiating a lower interest rate on the ESOP’s promissory note to the shareholders.
Walsh v. Bowers is a significant ESOP valuation case because, although the DOL was able to point out several deficiencies in the share-valuation process, the fiduciaries successfully argued that they had retained appropriate experts, properly investigated financial projections provided by company management, and generally followed a prudent fiduciary process.
Reduction of Fiduciary Liability Based on Partial Forgiveness of an ESOP Loan (Walsh v. Vinoskey)
In this case, the DOL successfully charged that the sale of shares by a private company’s founder to an ESOP for $20.7 million, of which $10.4 million was paid in cash and $10.3 million in the form of a promissory note, represented ERISA breaches on the part of the founder and the ESOP trustee because the purchase price was far in excess of the shares’ fair-market value. The federal district court ordered the defendants to pay $6.5 million to the ESOP — the excess of the purchase price (including the note) over the fair value of the shares — even though the founder (Vinoskey) had forgiven about $4.6 million of the note after the company experienced financial difficulties following the sale.
The appellate court agreed with the lower court that Vinoskey had breached his fiduciary duty but held that the amount of debt forgiveness should have offset the $6.5 million award. This holding reduced the damage award significantly, to about $1.8 million.
In its decision, the appellate court distinguished earlier cases in which courts had refused to reduce fiduciary liability awards and held that reduction of the award was necessary in order to preclude a windfall to the ESOP.
This decision is significant because it suggests that a seller of closely held shares to an ESOP in a leveraged transaction may be able to reduce its fiduciary liability by negotiating a reduction or cancelation of the ESOP’s promissory note.
Sale of ESOP shares for inadequate consideration (Walsh v. Peterson)
In November 2021, the DOL filed a complaint in federal court alleging that an ESOP trustee and three members of the sponsor’s board of directors breached their fiduciary duties by approving the sale of the ESOP’s shares for less than their fair-market value.
The complaint alleges that the ESOP trustee and the directors caused the ESOP to sell its shares back to the sponsor for about $12.5 million when their true value, according to the DOL, was between
$44.8 million and $58.2 million. The sale by the ESOP for inadequate consideration is alleged to have worked to the detriment of ESOP participants and to the benefit of the new shareholders. The company’s assets were subsequently sold for $200 million.
Although the vast majority of private-company ESOP valuation cases involve allegations that the trustee caused an ESOP to purchase shares for more than their fair value, the Peterson complaint illustrates that the “adequate consideration” requirement under ERISA applies equally to the sale of shares by an ESOP.
Robert W. Patterson is a member (partner) in the Buffalo office of Syracuse–based law firm, Bond, Schoeneck & King PLLC. He is a member of the firm’s Employee Benefits and Executive Compensation practice area and has expertise in 401(k) and other qualified retirement plans, ESOPs, deferred compensation and equity-incentive plans, and more. This article is edited and drawn from Bond’s website. For the original version, including footnotes, visit: https://www.bsk.com/news-events-videos/important-recent-esop-developments
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