LAPC: Would anyone be willing to submit this and report back on your result? Goal being for the 4.9% deduct to be rescinded.
Good Reason: A material reduction in your Base Salary as compared to your Base Salary immediately prior to the Change of Control.
The Plan Administrator’s position that 5% as a firm value is the line between material and immaterial is not supported by historic legal or accounting rulings or positions. Per the SEC Staff Accounting Bulletin 99 which contemplates materiality, the Financial Accounting Standards Board rejects a formulaic approach to defining materiality and advises that all circumstances must be considered.
While the SEC and the FASB positions are regarding corporations, not individuals, the concept translates.
Per the SEC, “exclusive reliance ..… on any percentage or numerical threshold has no basis in the accounting literature or the law.”
- 9% is extremely material to a household budget. In my case, here are some examples of what the net effect equates to:
- home and auto insurance combined
- 20% of childcare costs
- > 100% of our household gasoline cost
SEC: “A matter is "material" if there is a substantial likelihood that a reasonable person would consider it important.”
Without question, a reasonable person would consider important having to make a choice between gasoline, insurance, or childcare. Moreover, 4.9% may be the difference between a household running at a net profit (accruing savings) vs. a net loss (accruing debt) which is extremely material to that household.