Split Dollar and Sarbanes-Oxley Act

[Guest Steve Morgan]

It appears clear that Sec. 402 of Sarbanes-Oxley

will apply to collateral assignment split dollar

arrangements which are not grandfathered and are subject to the loan provisions of the proposed

split dollar regulations.

However,I am having difficulty envisioning how

a pre January 28,2002 endorsement(non equity)split

dollar agreement will fall within the purview of

Sec 402 of Sarbanes-Oxley.

The split dollar arrangement under review provides

only a death benefit to the executive. No cash

value will be made available to the executive.The

executive contributes, by payroll deduction, an

amount equal to the annual economic benefit. The

source of the executive's contribution is a bonus

from the employer. This bonus to the executive is

also "grossed up" so the executive has a $0 cost

for their death benefit(PS 58 Offset w/ Double

Bonus).

Your feedback is appreciated. Thank you.

[Kirk Maldonado]

I concur in your reasoning, but I doubt that we will see any guidance on this point from the SEC.

Part of that is due to the fact that the SEC really doesn't understand how split dollar works, as evidenced by their rules relating to the disclosure of these arrangements in the executive compensation part of the proxy rules.