Full opinion text
MEMORANDUM AND ORDER SARIS, District Judge. I. INTRODUCTION Plaintiff, Louise M. McCarthy, was formerly the Senior Vice President, Senior Counsel, and Assistant Secretary of defendant, The Commerce Group, Inc. (“CGI”), and General Counsel of several of CGI’s subsidiaries. Prior to June 2008, CGI was a publicly-traded Massachusetts-based holding company operating entirely through its insurance subsidiaries. On June 4, 2008, CGI merged with defendant Mapfre, S.A. (“Mapfre”) and became a private, wholly-owned subsidiary of a publicly-traded foreign corporation — a Madrid-based global conglomerate of insurance subsidiaries. On June 5, 2008, one day after the closing of the merger, McCarthy submitted a Notice of Intent to Resign for Good Reason pursuant to the terms of her 2007 Employment Agreement and her 2006 and 2007 Incentive Award Agreements. Her “Good Reason” claim was denied. As a result, McCarthy claims that CGI’s denial violated the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. §§ 1001, et seq., and that Mapfre intentionally interfered with her rights under the 2007 Employment Agreement. After a seven day trial, I make the following findings of fact and conclusions of law, and order that the case be remanded to the plan administrator because of significant procedural flaws that rendered the decision to deny Plaintiff benefits under the top-hat plan unreasonable. II. FINDINGS OF FACT 1. Rising Through the Ranks CGI hired McCarthy as Senior Counsel in September 2001. Prior to her employment at CGI, McCarthy practiced insurance regulatory law after graduating from University of Maine Law School in 1992. She served as Assistant General Counsel of the Massachusetts Division of Insurance from 1993 to 1995 and then as in-house corporate counsel at Commercial Union Insurance Company from 1995 to 2001. McCarthy is a member of the Massachusetts bar. McCarthy took no classes and had no experience or job training in SEC or corporate compliance matters. At the time McCarthy joined CGI in 2001, the Massachusetts-based company was just beginning to expand as a public company by acquiring subsidiaries outside New England. As such, her strong background in insurance regulation was valuable. During her tenure at CGI, McCarthy steadily rose through the ranks. In 2003, McCarthy was elected Assistant Vice President of CGI, making her one of a small group of officers. This position made her eligible for officer perks such as special compensation packages, and it also allowed her to build an important relationship with CGI’s Board of Directors. In May 2006, McCarthy was appointed Vice President and Senior Counsel of CGI. Three months later, McCarthy was made a Senior Vice President, Senior Counsel, and Assistant Secretary of CGI. As a result of her promotion to Senior Vice President at CGI, McCarthy was named a Section 16 officer, which meant she had a significant policy-making position within the company and was deemed to have material inside information at all times according to the Securities Exchange Act. See 15 U.S.C. § 78p; 17 C.F.R. § 240.16a-l(f). As a Section 16 officer, McCarthy also attended the Annual Meeting of Shareholders, where she was publicly introduced as a member of the senior management team. In August 2006, she was appointed Senior Vice President and General Counsel of the insurance subsidiaries, the “Group.” The subsidiaries’ legal affairs were consolidated under her management. Her positive job evaluations were reflected in the significant salary boost that followed. By the time McCarthy resigned, she was earning a $270,000 base salary and her 2007 Restricted Stock Unit Award amounted to $565,988, grossed up to account for tax and other consequences under the Internal Revenue Code. In 2006, McCarthy began reporting to two different supervisors in recognition of her dual role. In her capacity as Senior Vice President, Senior Counsel, and Assistant Secretary to the parent company, CGI, McCarthy reported to the General Counsel of CGI, James Ermilio. In her capacity as General Counsel, Senior Vice President, and Assistant Secretary to the subsidiaries, McCarthy reported directly to Gerald Fels, who held the position of CEO to each of CGI’s subsidiaries. 2. Public Company Duties In 2006, after Ermilio accepted a more business-oriented function within the company as newly-elected Executive Vice President, McCarthy assumed greater supervision of the day-to-day legal affairs as the highest-ranking lawyer in CGI with an exclusively legal function. In fact, McCarthy’s new role as Senior Counsel and Senior Vice President to CGI parent corporation carried specific public company responsibilities in addition to her corporate commercial law and insurance regulatory duties such as management of all multi-state insurance regulation matters, litigation, and contract disputes. Ermilio began assigning McCarthy public company-related duties as early as 2003, shortly after SarbanesOxley (“SOX”) went into effect. However, McCarthy assumed more responsibility after her promotion. At the time, McCarthy received one formal training on SEC matters from CGI’s outside firm, Nutter McClennen & Fish LLP. Nutter was the outside counsel which handled SEC and SOX related matters for CGI. In-house, McCarthy provided legal services to the audit, corporate compliance and nominating committees; participated in the Massachusetts Executive Committee, Countrywide Executive Committee, the Strategy Committee and the 8-K Disclosure Committee; reviewed SEC filings prepared by the company accounting department, namely 10-Qs, 10-Ks; contributed to the filing of § 302 Certifications by certifying the implementation of internal controls within her department; developed director training programs and related-party transaction policy; and actively participated in the development of insider trading programs and § 16A/Form 3 filings. McCarthy took particular pride in her title as a Section 16 officer and her membership on the Strategy Committee, which was in charge of establishing enterprise-wide strategy and making material transaction decisions. It supervised the growth of the company outside Massachusetts by recommending subsidiary acquisitions, hiring new employees, determining the sites of offices around the country, and overseeing the operations of CGI’s insurance companies. As for the other executive committees, McCarthy was responsible for updating the nominating and corporate governance committee charters, and she attended meetings of the nominating, corporate governance, and audit committees as necessary. For example, McCarthy drafted the summary report for the nominating committee meeting held on November 14, 2007. However, she did not attend the four compliance committee meetings between August 2006 and October 2007; a member of her staff attended in her stead. As for the Audit Committee, McCarthy was not a member but she attended part of each meeting to present on the status of significant legal matters. She also kept the Audit Committee charter current. For this, she relied heavily on Todd Peck-ham, a non-attorney legal analyst on her staff, to monitor SEC rule updates and alert her as necessary. McCarthy implemented a director training program, continuing education program, and Board of Directors Manual for which she compiled important internal documents and company filings. The director training program was not utilized, however, because there were no new directors during McCarthy’s tenure. Additionally, under McCarthy’s supervision, Nutter worked with a member of her staff to create a conflict-of-interest policy. According to McCarthy’s supervisor, Ermilio, who had recommended McCarthy for the promotion, it is of “tremendous importance” for in-house counsel to advise the company on SOX matters and “very important” for CGI to implement policies and procedures ensuring SOX compliance. In his view, significant internal and external status and prestige accompanied her role advising committees of the Board of Directors and her title as a Section 16 officer. To his knowledge, Ermilio believed McCarthy’s position would make it easier to get another job as a general counsel in another outfit. At the same time, Ermilio noted that such a promotion brought a “mixed blessing” of prestige and responsibility. McCarthy’s performance reviews from 2007 and 2008, however, indicate that her most significant and most time-intensive projects related to her role as General Counsel to the subsidiaries. For example, in 2007, McCarthy was the lead attorney in the acquisition of State-Wide Insurance Company, and she negotiated the 20-year AAA agreement. In comparison, Ermilio agreed that public company-related duties were a “relatively small” part of McCarthy’s day-to-day tasks. Instead, CGI routinely retained outside counsel for such matters. When asked, McCarthy could not estimate the percentage of time she spent on SEC matters. 3. The Top Hat Agreements At the start of CGI’s merger discussions with Mapfre and other potential suitors, CGI’s independent Board of Directors authorized the company to enter into Employment Agreements with eleven of its key Executive Officers. McCarthy was included in this group because of her role as Senior VP and Senior Counsel to CGI. The group was comprised of the “Section 16 officers” of CGI. The non-Section 16 officers also received Special Officer Separation Plans with similar benefits. As for the Section 16-officer Employment Agreements, they provided a significant severance payment, as well as life and health insurance benefits, in the event the executive resigned for “Good Reason.” “Good Reason” is defined as: (i) a substantial and adverse alteration in the nature, status, or prestige of the Executive’s responsibilities, title, authority, powers, functions, duties or reporting requirements, taken as a whole, as compared to the Officer’s responsibilities, title, authority, powers, functions, duties or reporting requirements, taken as a whole, immediately prior to the Change in Control ... [I]n no event shall ‘Good Reason’ be deemed to exist unless the Executive shall have given the Company written notice before the Executive’s voluntary resignation and not more than three (3) months after the Executive first has actual knowledge of the facts and circumstances allegedly constituting Good Reason. It is undisputed that CGI’s merger with Mapfre constituted a “Change in Control.” Thus, under the terms of the Agreement, the Board of Directors or the Compensation Committee would determine whether “Good Reason” exists if provided with proper notice by the claimant. The Board’s decision is “conclusive and binding.” No specific procedures for determining Good Reason claims were adopted by CGI or Mapfre to guide the decision-makers in reaching a decision. Under the Agreement, the Executive could choose the time period that the Board or Compensation Committee would use as a basis of comparison for determining whether her position changed substantially and adversely. The Agreement reads, “[I]n the event of a Proposed Business Combination that results in a Change of Control, the determination of Good Reason shall be made, at the Executive’s election, relative to conditions existing immediately prior to the commencement of the Proposed Business Combination.” Notice must be provided within three months from the time the Executive first has “actual knowledge of the facts” supporting the Good Reason claim, according to the agreement. The agreement states, “in no event shall ‘Good Reason’ be deemed to exist unless the Executive shall have given the Company written notice before the Executive’s voluntary resignation and not more than three (3) months after the Executive first has actual knowledge of the facts and circumstances allegedly constituting Good Reason.” The company is given the opportunity to “cure” the basis for the executive’s Good Reason claim within twenty days after the receipt of the Notice. McCarthy first had “knowledge and awareness” of CGI’s possible merger with Mapfre one month earlier, on August 14, 2007. The merger, however, was still in a preliminary stage — there were several regulatory and antitrust hurdies to overcome before the closing. These approvals were ultimately achieved in May 2008 after significant financial disclosures and public hearings. McCarthy first reviewed the draft Employment Agreement as in-house counsel when it was still in development. She then signed the finalized Employment Agreement on September 7, 2007. At the time McCarthy signed, the Compensation Committee responsible for determining Good Reason claims was composed of the independent directors of CGI, each with substantial shareholdings of CGI stock. After the closing of the merger, the former Compensation Committee disbanded so that when McCarthy submitted her Good Reason Notice, the Board of Directors making the decision was then comprised of executives from the acquirer, Mapfre. In addition, McCarthy also received Incentive Award Agreements, beginning in 2003, which governed her bonus compensation. Under these agreements, McCarthy could be granted awards each year, payable three years after the grant. In this action, McCarthy is seeking the amounts allegedly due to her under her 2006 and 2007 Incentive Agreements with CGI. These Incentive Agreement awards constitute “Accrued Obligations” under McCarthy’s Employment Agreement. Thus, if the Board had found she resigned for Good Reason, McCarthy would be owed the amount due under these agreements in addition to the Employment Agreement’s severance package and health plan. It is unclear from the terms of the 2007 Employment Agreement whether the Board of Directors or the newly formed Compensation Committee constitutes the “plan administrator.” The Incentive Plan, on the other hand, clearly identifies the Compensation Committee as “plan administrator.” For purposes of this opinion, the Court will assume the Compensation Committee, composed of CGI’s new Board members, absent Gerald Fels, constituted the “plan administrator” for the Employment Agreement because they alone voted on McCarthy’s claim. The parties do not debate the point. 4. Merger with Mapfre Andres Jimenez, President and Chief Operating Officer of Mapfre Internacional, a subsidiary of Mapfre S.A., was primarily responsible for exploring a possible expansion into the United States and negotiating the agreement with the help of Javier Fernandez-Cid, the then-Director and General Manager of Mapfre Internacional; Esteban Tejera, Chief Legal Officer of Mapfre 5. A.; Domingo Sugranyes, CFO of Mapfre; Jose Manuel Gonzales Porro, Secretary General to Mapfre; Claudio Ramos, head of the International Legal Department; and Jamie Tamayo. Mapfre began discussing a possible merger with CGI in summer 2007, and, in August 2007, the CGI Board voted in favor of the merger. By October 2007, the merger agreement was signed. Between August and October, McCarthy populated a virtual data room with internal CGI documents for Mapfre to examine as part of their “due diligence.” Among those considered were the Section 16-officer Employment Agreements and Incentive Award Agreements. During the negotiation process, Mapfre urged Gerald Fels, CEO of CGI, to condition the merger on CGI’s Section 16 officers’ signing Retention Agreements that waived their rights to assert Good Reason solely due to conditions that existed as a result of the merger. On October 29, 2007, Andres Jimenez called the Retention Agreements a “key part of the transaction” and pressed Fels, in the alternative, for a signed statement which read: I would like to express that I have the intention to continue carrying out my executive duties (position) within the Commerce Insurance Group for a reasonable period of time, under terms and conditions mutually acceptable which will be determined before the closing of the merger agreement. Also, I will do my best efforts to obtain from the key management personnel of the company their agreement to continue serving in their respective management positions following the closing of the transaction. The “key management personnel” to whom Jimenez refers are Jim Ermilio and Randall Becker. Mapfre sought to retain CGI management because the foreign acquirer was unfamiliar with the changing Massachusetts auto insurance market and because CGI, as a future subsidiary of Mapfre, faced a possible $100 million payout if each eligible executive filed for Good Reason. No funds were reserved pre- or post-merger for payments that may have become necessary as a result of the existing CGI Employment Agreements or Mapfre’s proposed Retention Agreements. Many of Mapfre’s key executives were compensated in part by incentive payments based on the performance of Mapfre’s subsidiaries. Fels refused to comply with Jimenez’s request because “it would create a personal interest in the transaction,” and he feared making the closing contingent on “the consummation of new agreements with individual officers.” Nevertheless, Fels emailed Jimenez that same day assuring him, “I want to give you my personal commitment that I plan to see this transaction through to a satisfactory conclusion for both of our enterprises.” Two days after the merger agreement was signed in October 2007, Fels voluntarily agreed to waive his rights under the Employment Agreement with respect to Mapfre. By June 4, 2008, the closing date, Fels had reiterated his personal commitment to waive his Good Reason rights under the existing Employment Agreement in favor of a Supplemental Agreement by which critical officers, such as Fels himself, would be eligible for incentive payments based on the company’s 2009 financial performance. It was understood that these payments would be capped and would not equal the payout due if each Section 16 officer was found to have had “Good Reason” to resign under the 2007 Employment Agreement. McCarthy was not on the list of “critical officers” prepared by Fels; thus, there were no plans to offer Plaintiff this Supplemental Agreement. Eventually, after the closing, Fels, Becker, and Cathleen Moynilian of the Human Resources Department, signed these Supplemental Agreements. Aside from these personnel negotiations, Mapfre and CGI needed to obtain shareholder, regulatory, and antitrust approvals to close on the merger agreement. McCarthy, along with Ermilio and others at CGI, met with Mapfre executives, including Mapfre’s in-house lawyers Claudio Ramos and Jose Manuel Porro, at least once in Boston in April 2008 to strategize about obtaining the regulatory approvals needed. The meeting was contentious; however, no critical remarks were directed at the plaintiff specifically. Mapfre and CGI ultimately achieved these approvals in May 2008 after significant financial disclosures, votes, and public hearings. Both McCarthy and Ermilio felt sidelined by the Mapfre executives during that meeting and subsequently. McCarthy in particular feared, “these would be the new bosses” and that “they would be difficult to work for,” especially Porro. During those meetings, McCarthy’s supervisor, Ermilio, described the Mapfre executives’ dismissive attitude toward McCarthy by saying, “They think you’re my girlfriend.” During a regulatory meeting in Massachusetts in spring 2008, a friend of hers commented that McCarthy looked as if she was carrying the briefcases of the Spanish guys, or words to that effect. McCarthy first met with an attorney at the end of that month, on April 80, 2008. Shortly before CGI and Mapfre closed on the merger, Ermilio advised Mapfre, in a memorandum, that the new Board “may be required to act shortly after the closing in connection with claims by officers for severance under the change in control provisions” in the Employment Agreement. Ermilio’s memo did not outline a process for considering these claims except to advise the Board to form a Compensation Committee, which would make the Good Reason determinations. CGI closed on the merger with Mapfre on June 4, 2008. That same day, McCarthy received news of the new make-up of the Board of Directors and subsidiary boards. Since the company was no longer a publicly-traded company constrained by the rules of the SEC requiring a majority of independent directors, Mapfre selected all inside directors. The new Board would be comprised of Mapfre executives and Gerald Fels. The size of the Board was significantly reduced and Andres Jimenez became Chairman of CGI. After the merger, three layers of management stood between McCarthy and the Chief Legal Officer of the enterprise. Ermilio remained McCarthy’s direct supervisor; Ermilio was then supervised by Ramos, Director of International Legal Affairs, who, in turn, was supervised by the Director of Legal Affairs worldwide. 5. McCarthy’s Notice of Intent to Resign McCarthy gave written notice on June 5, 2008, the day after the merger took place, of her intention to resign for Good Reason effective as of the close of business on July 7, 2008. In her Notice, she asserted that as a result of the Change in Control: “the nature, status, and prestige of [her] responsibilities and functions are substantially and adversely altered. The core duties and functions assumed by McCarthy as counsel to a public company no longer exist. The nature and prestige associated with her position have been eliminated.” McCarthy further asserted, “her core responsibility as Senior Counsel to CGI ... was defined by the fact that CGI was a public company.” She listed specific ways in which her position had and would change — advising senior management and the CGI Board of Directors on corporate governance issues such as SEC reporting; preparing for and attending meetings of the Nominating and Corporate Governance Committee; advising the Audit Committee and updating its charter; preparing quarterly reports and meeting with external auditors of CGI in compliance with SOX; preparing responses to SEC inquiries; participating in the review of SEC filings; serving as member of the 8-K Committee regarding public disclosures; advising on insider trading. She also emphasized the fact that she would no longer provide legal advice to the strategic decision-makers of the ultimate corporate enterprise (now Mapfre). In her view, while she would still report, post-merger, directly to CGI General Counsel, Ermilio, and CGI CEO, Fels, Ermilio and Fels no longer controlled the strategic direction of the entire organization as CGI became just one of Mapfre’s many subsidiaries. If McCarthy prevailed on her Good Reason claim, she would have been entitled to $630,221 under her 2006 Incentive Award Agreement; $217,805 under her 2007 Incentive Award Agreement; $3,622,220 under her Employment Agreement (including certain gross-up amounts, plus additional gross-up payments, if any, that may be due for potential excise and other taxes due under the Internal Revenue Code). When considering her rights under the Employment Agreement, McCarthy never asked Mapfre to better her position within the new conglomerate in any way. Ermilio, her direct superior and the CGI Executive Vice President and General Counsel, also gave Good Reason Notice one day after McCarthy. The two did not coordinate with respect to their Notices. 6. Eye-Rolling Fels was surprised and upset when McCarthy first delivered her Notice; he believed her claim was “bogus.” Fels testified, he “wasn’t going to waste ... 10 million plus dollars basically on claims that were, in my opinion, absolutely bogus.” He “simply couldn’t justify giving into [these claims] because probably another dozen officers could make the same kind of argument.” Granting such claims could set a precedent, “if ... word got out that I was going to throw around that kind of money.” Fels contacted Andres Jimenez of Mapfre as well as Mapfre’s counsel, Claudio Ramos, for direction on how to proceed after receiving the Notice. In an email from Fels to Jimenez on June 5, 2008, Fels wrote: “I am quite disappointed that this situation occurred at such an early stage. You can also be assured of my full support to get this resolved on MAPFRE’s terms.” Fels followed up the next day with another email to Jimenez: I am extremely disappointed by her action as she did not discuss this issue me [sic] at all before she delivered her letter. In any event, I recommend we need to act with resolve in this matter. It goes to say without question with the transaction completed our in house legal capacity can be cut back. I hate to lose her, but we have to consider the consequences if we give in to her demands. Those “consequences” included CGI’s potential exposure of over $100 million in severance liability if each of its key executive officers made similar Good Reason claims. Fels also informed Randall Becker, CGI’s Chief Financial Officer, of the Notice on June 5, 2008. Becker noted that when Fels handed him a copy of McCarthy’s Notice, Fels rolled his eyes. Becker, likewise, was “shocked” to learn of McCarthy’s filing because he had not anticipated her Good Reason claim. Claudio Ramos made a special visit to Webster, Massachusetts shortly thereafter. While in Boston, Ramos informed McCarthy that the Board would be holding a meeting to consider her claim, and he invited her to attend. No specifics regarding date or time were discussed. McCarthy asked him, “Do you have everything you need?” to which he replied, ‘Yes.” The two did not review the details of the claims process or the basis for the claim. McCarthy was content that the Board make a determination on the facts laid out in her Notice alone. McCarthy’s attorney wrote in a letter to Ramos dated June 16, 2008: You have graciously extended an invitation to Ms. McCarthy and me to attend the Board of Directors’ meeting. We assume that the purpose of our attendance pertains to the Notice of Intent to Resign for Good Reason submitted by Ms. McCarthy on June 5, 2008. It is our understanding from your conversation with Ms. McCarthy that you have all of the information you need. If that is the case, we are content to stand by the information set forth the letter [sic], and will await CGI’s response. If the board wishes to discuss its response to Ms. McCarthy’s Notice, it would be helpful to have that in writing in advance, to determine if our presence at the meeting is necessary. During that same visit, Ramos separately met with James Ermilio. Ramos asked Ermilio to withdraw his Good Reason claim and stay on as Chief Legal Officer. Ermilio was not convinced. 7. The Katten Investigation Mapfre and CGI retained Katten Mu-chin Rosenman LLP (“Katten”), a New York-based law firm, on June 12, 2008 to investigate the merits of McCarthy’s claim for benefits. The firm was hired to represent the Board of Directors upon the recommendation of Mapfre’s legal department. During the period of retention, Katten acted both as investigator and as counsel for Mapfre and CGI, taking direction mainly from Claudio Ramos. Katten had done prior regulatory work on behalf of Mapfre’s U.S. subsidiaries. One of the Katten attorneys, Marc Tract, was also a member of the Board of Directors of a Mapfre subsidiary. Tract, a partner specializing in corporate and regulatory insurance law at Katten, became the point-person leading the investigation into Plaintiffs claims. In the initial conversation on June 12, 2008, Fels informed Tract that two senior legal department employees submitted notices to resign for Good Reason in the days following the merger closing. Fels expressed surprise over McCarthy’s Notice because he saw no change in her position post-merger. Both Tract and Fels understood Katten’s mission as conducting an examination of the facts underlying McCarthy’s claim. Katten believed that it was operating under a strict deadline because, under the terms of the Employment Agreement, the company had only 20 days from the submission of McCarthy’s Notice to “cure” the basis of her Good Reason claim. So, Katten began the investigation immediately on June 12th under the direction and management of Claudio Ramos. To begin, Tract requested a list of documents from Fels and Claudio Ramos. Later that day, Tract followed up with another email requesting “job descriptions for all relevant individuals.” Tract also assembled a team at Katten comprised of four additional partners and an associate — Merril Mironer, an employment and labor lawyer; Ed Rayner, an employee benefits lawyer; Michael Verde, a commercial litigator; James Tampellini, a commercial litigator; and Hannah Amoah, a Katten associate. The team identified McCarthy’s Employment Agreement and Incentive Agreement as “top hat” ERISA plans early in the review. On June 12, 2008, Ms. Amoah conducted a review of all of CGI’s SEC filings since 2000 and found no relevant information that would indicate that either McCarthy or Ermilio worked “exclusively or extensively on securities related matters.” A few days later, on June 18, 2008, Verde and Tampellini visited the Webster office of CGI. While in Webster, Tampellini and Verde interviewed Fels in person and Randall Becker over the phone while Becker was on vacation. Fels spoke candidly about McCarthy’s Notice; he told them “the claim was bogus.” Fels believed her job as General Counsel of the insurance operating subsidiaries was far more prestigious than her role as Senior Counsel within the public company because, as General Counsel, McCarthy was indispensable to the company — she handled all the legal matters for the subsidiaries, including state regulatory issues and contract disputes. Meanwhile, Becker explained to Katten that as CFO he was responsible for all public reporting, cash flow, budgets, retirement plans and the like. In fact, 30-40% of Becker’s work dealt with public company responsibilities; he worked closely with the SEC Manager at CGI on those tasks. When asked to comment on McCarthy’s Good Reason claim, Becker told Katten that she had exaggerated her public reporting responsibilities. Becker identified himself as the signing officer, not McCarthy, and claimed responsibility for many of the SEC filings listed in her Notice — namely, quarterly reports, 10-Ks, 10-Qs, and 8-Ks. He also informed Katten that Nutter provided most of the legal advice on public company responsibilities and that McCarthy’s nominating and corporate governance committee work was minimal. By this time, Fels had given his personal commitment to Andres Jimenez that he would waive his rights under the Employment Agreement, and Becker had assured Fels he had no intention of submitting a Notice himself. The Katten team also conducted a comprehensive search of McCarthy’s emails since 2001, with the help of CGI’s Information Technology department, and all of the documents residing on her hard drive. Katten searched 15,860 emails dating from 2001 using search terms targeted at highlighting any emails related to McCarthy’s public company reporting responsibilities and her securities work. Katten prepared a memorandum for the Board summarizing the results of its search and conclusions based on its interviews. In preparing this memo, Katten elected not to interview either McCarthy or Ermilio, her direct superior, because they had both submitted notices of Good Reason. On June 18, 2008, Katten submitted the memorandum summing up these findings. It explained the Board’s discretionary authority in deciding McCarthy and Ermilio’s Good Reason claims; it calculated the payouts that would result from a Good Reason finding; it defined “Good Reason”; it listed Ermilio’s and McCarthy’s allegations in support of their Good Reason claims; it summarized the factual findings of its investigation; and it noted the possibility of contesting the timeliness of their Notices. The memo also stated that neither executive, Ermilio or McCarthy, had elected a time period to serve as the basis of comparison as is their right under the Employment Agreement; thus, Katten assumed the executives intended the comparison to be with the conditions existing immediately prior to the Merger on June 4, 2008. At the time the memo was written, McCarthy had not volunteered, nor did CGI/Katten ask McCarthy for a time period to serve as a basis for comparison. McCarthy verbally requested a different time frame from the one Katten assumed on June 25, 2008 when she met with the Board regarding her claim. At that time, she chose the period between her last promotion and the signing of the merger agreement — August 2006 to October 30, 2007 — as the basis for comparison. In the memo, Katten reported that less than l/10th of 1% of her emails related to public company matters and that she had no email folders marked “SEC,” “NYSE,” “SOX,” “SARBOX” or “Regulatory.” The firm found only 100 emails between 2004 and 2008 relating to CGI’s 10-K, 10-Q and 8-K filings, but 50 of them related to the merger with Mapfre. Katten did find documents relating to her participation as a member of the Compliance Committee, but they interpreted this work to be “minimal at best.” Katten also reported that there does not appear to have been a “constant flow of communication” between McCarthy and Brian Breeden, the SEC Reporting Manager in the accounting department at CGI. Breeden’s primary duties were to keep the calendar for all SEC filing obligations, obtain the necessary information, and do the initial drafting. He was not, however, a member of the 8-K Disclosure Committee on which McCarthy sat. After reviewing the legal bills provided by CGI’s primary outside counsel, Nutter, Katten reported that these bills showed a “vast majority of the work associated with making public filings and other associated ‘public company’ work was handled by that firm and was not handled by the company internally.” Notably, the memo contained a few inaccuracies. First, at the very beginning of Katten’s analysis, the memo reports that McCarthy has “declined the Company’s invitation to participate in the meeting, making it difficult to actually explore [her] allegations in further detail.” Although McCarthy’s initial communications with Claudio Ramos on June 16, 2008 were unclear, the subsequent conversations McCarthy’s attorney had with Katten attorney Ed Rayner indicate that McCarthy desired to attend the June 20th meeting. Second, Katten wrote, “Gerald Fels also advised that McCarthy had made some effort with human resources to try and have her job description changed, sometime around August of 2007, to reflect more SEC work but the change was never made.” However, there is no evidence that such an effort was made. Third, Katten suggests that McCarthy’s Good Reason Notice was untimely because she was aware of a potential merger with Mapfre as early as August 2007, yet she submitted her Notice ten months later. Indeed, the Employment Agreement requires the Executive to provide written notice within three months after acquiring actual knowledge of the circumstances allegedly constituting Good Reason. This position, however, does not recognize the many regulatory hurdles that Mapfre and CGI faced through May 2008, before the closing. Thus, this Court finds McCarthy’s notice was timely as it fell within the three months following the final regulatory approval in May. As for the issue of “status or prestige,” Katten researched whether any cases with precedential value existed on the matter and found none. No further analysis was conducted into McCarthy’s alleged diminishment of status or prestige. And, significantly, Katten’s memo did not address this issue. After its investigation, Katten reached the conclusion: McCarthy “appears to be an insurance regulatory practitioner,” not significantly involved with CGI’s securities matters. Katten attorney, Ed Rayner, wrote to McCarthy on June 18 and June 23, inviting McCarthy to “make herself available to answer any questions that may arise” and to “present whatever facts, documents and points she wishes to make to the Board.” He specifically requested her participation because he had previously been misinformed that McCarthy had declined the Board’s invitation. After sending that email, Rayner spoke with McCarthy’s attorney on the phone at which point the dialogue between the parties began to deteriorate; this deterioration was reflected in ensuing email correspondence. McCarthy’s attorney informed Rayner in an email dated June 20, 2008 that, in fact, McCarthy wishes to attend and that there are “stacks and stacks” of documents Katten could review supporting McCarthy’s Good Reason claim and several people that Katten should interview about McCarthy’s job duties, specifically her direct supervisor, Ermilio. McCarthy’s attorney further wrote: You indicated that the Board was interested in determining Ms. McCarthy’s ‘veracity,’ since, according to a vast but vaguely described email search you did not see evidence that she spent much time working on matters having to do with CGI’s status as a public company. Ms. McCarthy’s ‘veracity,’ integrity, and utmost good faith has NEVER been questioned before, and this, in and of itself, indicates a diminution in her status at CGI. McCarthy’s attorney attached to her email a copy of CGI’s Corporate Governance Guidelines manual as one piece of evidence regarding McCarthy’s public company responsibilities. Later that day, Rayner emailed his colleague, Verde, This manual seems to be pretty pro forma and it is very unlikely she drafted this from scratch (especially as she had zero background in corporate or securities law). Marc, any idea where we may be able to find a model for this sort of manual to show that McCarthy just did some minor tweaks (like change the title) to a well-recognized set of model rules to adopt this for Commerce? This would make her and her lawyer look, in legal terms, stupid. Also on June 20, 2008, Claudio Ramos of Mapfre wrote to Marc Tract at Katten, We have reviewed all the documents available in the SEC’s Website regarding Commerce activity from 1996 up to now ... the only operations [Ermilio and/or McCarthy] have carried out are issuance of debt in 2003, split of shares in 2006, modification of the articles of incorporation ... Therefore, there is not only a question of quantity but also a qualitative one. Could it help? To which Tract responded, “This is helpful, and tends to show that both Ermilio and McCarthy can thank Mapfre for giving them the SEC training they now claim they have.” 8. The Committee Meetings The first meeting between the plaintiff and the Board was scheduled for June 20, 2008, after the confusion as to whether McCarthy desired to attend at all. Due to a family emergency, McCarthy could not attend the meeting. As a result, the Board rescheduled her appearance for June 25, several days later. However, the Board continued to meet on the 20th for 45 minutes to discuss the claim. Claudio Ramos, the CGI Board members, and representatives from Katten were present at the meeting. First, the group formed an Executive and Compensation Committee to make the Good Reason determination. The committee consisted of Andres Jimenez, Javier Fernandez-Cid, Domingo Sugranyes, and Esteban Tejera. Only these four executives, a subset of CGI’s Board of Directors, would later deliberate and vote on whether Ermilio or McCarthy resigned for Good Reason. The Compensation Committee then reviewed Katten’s memo section by section, heard from Fels regarding CGI’s operations, and voted to deny Jim Ermilio’s Good Reason claim. Only a few Compensation Committee members read the documents sent by Katten in preparation for the meeting. For example, prior to the meeting, Andres Jimenez, Chairman of the CGI Board, did not review any of the materials sent by Katten, which included Ermilio’s and McCarthy’s Notices, the 2007 Incentive Award Agreement, a spreadsheet calculating Officer Incentive Awards, the 2007 Employment Agreement, Mapfre’s proposed Retention Agreement, a press release on the merger signing, and correspondence from McCarthy’s counsel and Jim Ermilio individually. Fels made a presentation to the Compensation Committee on McCarthy’s various duties within CGI. He stated that “McCarthy was hired because of her background as Assistant General Counsel with the Massachusetts Division of Insurance. Ms. McCarthy was the Company’s liaison to insurance regulators throughout the country. She had no responsibilities specifically related to the Company as a publicly traded company.” However, this key representation to the board is inaccurate. Both McCarthy and her supervisor, Ermilio, have provided evidence on McCarthy’s responsibilities with respect to the public company-related matters; for example, McCarthy sat on the 8-K and Strategy Committees and reviewed SEC filings. In reaching a decision, the Compensation Committee members relied on Katten’s memo and Fels’s presentation. Esteban Tejera stated that the Katten memo answered all of his questions before the June 20th meeting. And Jimenez stated, “[W]e didn’t consider good reason ... after the study, we considered that there were [sic] no reason.” The Compensation Committee rejected McCarthy’s claim upon “the advice we received from the lawyers.” Additionally, Jimenez called Fels, “the most qualified person to give an opinion about the job of his colleagues.” None of the Compensation Committee members sought to interview Ermilio about McCarthy’s role in the company because Ermilio had submitted a Good Reason Notice himself. The Compensation Committee members did not fully understand McCarthy’s duties and reporting relationships. Jimenez thought McCarthy’s position was “Assistant General Counsel” under Ermilio. To that point, he stated, “I didn’t know and I don’t know exactly [McCarthy’s] functions.” Furthermore, Fernandez-Cid admitted that he did not understand the functioning of CGI’s nominating and corporate governance committee, audit committee, 8-K committee, or Section 16 officer designation when he was making his decision. The meeting ended after a brief discussion regarding the language in the Good Reason clause of the Employment Agreement. Specifically, those in attendance discussed the significance of the words “taken as a whole” and the meaning of “status and prestige.” As for the former, Tract informed the Compensation Committee that the Good Reason provision required a showing of a “substantial and adverse alteration” in each and every one of the listed factors — responsibilities, title, authority, powers, functions, duties, and reporting requirements — “taken as a whole.” According to Tract, “even if any one factor was in fact present, the Board must take the facts ‘as a whole’ to see if Good Reason exists with respect to all factors, taken as a whole.” Regarding the latter issue, the Compensation Committee quickly dispensed with McCarthy’s status and prestige claim by concluding no real diminution of “status or prestige” existed because now CGI was part of a growing global corporation and public company. Notably, in forming an opinion, the Compensation Committee largely did not rely on the timing of McCarthy’s Notice, Katten’s contention that McCarthy had declined an invitation to meet with the CGI Board, or a possible attempt by McCarthy to have her job description altered to include more SEC responsibilities. On June 23, 2008, two days before the rescheduled board meeting, Rayner emailed plaintiffs attorney with a summary of Katten’s findings so that McCarthy could present evidence and respond with particularity. He summarized Katten’s findings as follows: The Board has tried to verify Ms. McCarthy’s claims by reviewing its records. A review of over 15,000 emails sent and received by Ms. McCarthy revealed less than 200 that had any relevance to SEC regulations, SOX compliance, or any other issues related to CGI’s status as a public company. A review of documents authored by Ms. McCarthy found on CGI’s server showed a handful having any relevance to these areas. In addition, the understanding of senior executives of the company is that Ms. McCarthy’s role and area of expertise are almost exclusively in the area of insurance regulation. Katten did not inform the plaintiff that the Board had already met and rejected her claim regarding status and prestige. To prepare for the meeting, McCarthy gathered materials relating to her role as counsel to a publicly traded company. She provided the Compensation Committee with only six documents. McCarthy pulled her own job description, which she drafted in December 2006 and Ermilio reviewed in 2007. The description for her role as Senior Vice President and General Counsel read: Plan, supervise, and direct all aspects of the legal function of the corporation on an enterprise-wide basis, with overall responsibility for the legal affairs of the operating companies and secondary responsibility for the legal affairs of the holding company parent. Responsible for providing legal advice, counsel, and direction to senior management and the Board of Directors on all legal matters of the corporation, including corporate law and governance, contracts, compliance, and regulatory issues. Actively participate as a member of the senior management team in strategic business planning and development of corporate strategy. McCarthy also compiled organizational charts for CGI showing her position as second in command of the legal department in the parent company’s hierarchy and at the top of the legal department’s hierarchy of the subsidiaries. Additionally, she provided the Corporate Governance Guidelines, Board committee charters for the Audit and Compensation Committees, a copy of a § 302 certification, and an excerpt of CGI’s Annual Report, listing her as a prominent executive. Because McCarthy emailed these documents on the morning of the meeting, the Compensation Committee did not review them before McCarthy’s presentation. In attendance at the June 25, 2008 telephonic meeting were: (1) four Katten attorneys — Edward Rayner, Marc Tract, Michael Verde, and Merril Mironer, (2) Spanish counsel Claudio Ramos, (3) Gerald Fels, and (4) all of the Compensation Committee members — Andres Jimenez, Javier Fernandez-Cid, Domingo Sugranyes, Esteban Tejera. The conference call meeting totaled about 50 minutes. During that time, both McCarthy and her lawyer made presentations. First, McCarthy’s attorney explained her interpretation of the Good Reason standard and requested that the Compensation Committee keep an open mind. Then, McCarthy spent almost 45 minutes explaining to the Compensation Committee, (1) the timing of her Good Reason Notice, (2) the time period she elected to use to measure the change in her role pre- and post-merger, and (3) the basis of her Good Reason claim. McCarthy chose to submit her Notice on June 5, 2008 because she feared that, as in-house counsel, she may have been asked to weigh in on the merits of her colleagues’ Good Reason Notices should others submit. She had reason to believe through office gossip that several of her co-workers were also considering their rights under the Employment Agreement. McCarthy intentionally waited to submit her Notice until after the merger closed to ensure that CGI and Mapfre cleared the regulatory and antitrust hurdles. These approvals were ultimately achieved in May 2008 after significant financial disclosure and public hearings. Next, McCarthy told the Compensation Committee that she was electing the time period running from August 2006, when she was last promoted, to October 30, 2007, when the merger agreement was signed, as a baseline by which the Compensation Committee would measure the change in her position. The plaintiff then explained what she felt was a diminishment in scope of authority, status, and prestige. Specifically, she mentioned the elimination of her corporate governance duties and the lack of access to the ultimate decision-makers for the company — now Mapfre executives. In sum, McCarthy reiterated the claims expressed in her Notice. Little, if any, new information was provided. Lastly, she informed the Board of her unsatisfying interactions with Mapfre executives, especially Mr. Porro, leading up to the closing date. The Board did not ask any questions or otherwise interrupt McCarthy during her presentation. Once McCarthy and her attorney left the conference call, Fels informed the Compensation Committee that McCarthy exaggerated her role in public company matters. He reiterated his position (which was incorrect) that McCarthy had no responsibilities specifically related to CGI’s status as a publicly traded company, and he opined that McCarthy had no factual basis for claiming she had Good Reason to resign. Tejera, of the Compensation Committee, understood this statement to mean, “even if she had several tasks related to [public company work], they were not so important to constitute important [sic] part of her job.” At this time, Fels was still negotiating with these Mapfre executives regarding his own retention and rights under the 2007 Employment Agreement. The precise dollar-amount Fels would receive had not been settled yet. Immediately thereafter, the Compensation Committee voted to reject McCarthy’s claim. Fels did not vote as he did not sit on the newly formed Mapfre Compensation Committee. Instead, Jimenez, Fernandez-Cid, Sugranyes, and Tejera voted to deny. The conference call lasted only five minutes after the completion of Plaintiffs presentation. Tejera explained the brevity of this deliberation by stating, “We didn’t need a long time to discuss” because “we ha[dn’t] had time to change anything at Commerce, so we can’t understand and we can’t support this kind of complaint, we ha[dn’t] taken [sic] any decision relating to the job position of Ms. McCarthy.” On July 3, 2008 Fels sent McCarthy a letter notifying her that the Good Reason claim had been denied by the committee. The denial letter read, “After full consideration, the Board and the Executive and Compensation Committee have determined that there is no ‘Good Reason’ as that term is defined in both your Employment Agreement and any Incentive Award Agreement for your resignation.” The letter gave no reasons for the denial. In reply, McCarthy’s attorney inquired into Plaintiffs appeal rights and requested all the information upon which the Compensation Committee relied in making their decision as well as a copy of the minutes of the June 25, 2008 meeting. McCarthy never received a response. After McCarthy’s claim was denied, Fels attempted to reach an alternate resolution with McCarthy in which she would continue her work at CGI. McCarthy refused because it was impossible to cure the diminution she felt in “status and prestige” as a result of her personal interactions with Mapfre executives and CGI’s new position as a privately-owned subsidiary. III. DISCUSSION 1. Standard of Review The Supreme Court has held that a “denial of benefits challenged under § 1132(a)(1)(B) is to be reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan.” Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989). “When an ERISA plan gives the administrator the discretion to determine eligibility for benefits, a reviewing court must uphold that decision unless it is ‘arbitrary, capricious, or an abuse of discretion.’” Cusson v. Liberty Life Assurance Co. of Boston, 592 F.3d 215, 224 (1st Cir.2010). This standard applies “regardless of whether the plan at issue is funded or unfunded and regardless of whether the administrator or fiduciary is operating under a possible or actual conflict of interest.” Firestone, 489 U.S. at 115, 109 S.Ct. 948. The 2007 Employment Agreement is a “top hat plan” because the severance package was offered to only a “select group,” eleven executives, and the benefits would have been payable out of the employer’s general assets; the funds were not segregated. A “top hat plan” is a plan which is “ ‘unfunded’ and ‘maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees.’ ” Alexander v. Brigham & Women’s Physicians Org., Inc., 513 F.3d 37, 43 (1st Cir.2008)(quoting 29 U.S.C. § 1051(2)). Congress created this classification with the understanding that “high-echelon employees, unlike their rank-and-file counterparts, are capable of protecting their own pension interests.” Id. As a result, “Congress relaxed some of ERISA’s prophylactic obligations” for top hat plans, including rules governing fiduciary duty. Id. There is a split among the circuit courts regarding whether a de novo or arbitrary and capricious standard of review applies to top hat plans generally. Compare Craig v. The Pillsbury Non-Qualified Pension Plan, 458 F.3d 748, 752 (8th Cir.2006)(applying de novo standard); Goldstein v. Johnson & Johnson, 251 F.3d 433, 443 (3d Cir.2001)(same); with Comrie v. IPSCO, Inc., 636 F.3d 839, 842 (7th Cir.2011)(applying deferential standard); Sznewajs v. U.S. Bancorp Amended and Restated Supplemental Benefits Plan, 572 F.3d 727, 733 (9th Cir.2009)(same); Olander v. Bucyrus-Erie Co., 187 F.3d 599, 607 (7th Cir.1999)(same). The First Circuit has not taken a position. Here the CGI Employment Agreement provided: “[A]ny determination made by the Board ... shall be conclusive and binding upon the parties for the purposes of [the Employment Agreement] ... [and] the Incentive Plan.” Where a plan contractually grants the administrator discretion, under ordinary contract principles, the discretion must be exercised reasonably and in good faith. See Benham v. Lenox Sav. Bank, 26 F.Supp.2d 231, 238 (D.Mass.1998)(stating “top hat plans are unilateral contracts, and thus, are governed by contract principles”). In the circumstances of this case, because of the terms of the contract, the standard of review is deferential so long as the plan administrator acted reasonably and in good faith. As such, the debate over the standard of review is much ado about not much. See Craig, 458 F.3d at 752 (“The fact that we conduct a de novo review does not ... alter our analysis as much as it might appear at first blush.”). Under a deferential standard, procedural irregularities constitute an abuse of discretion when they are “serious,” have a “connection to the substantive decision reached, and call into question the integrity of the benefits-denial decision itself.” Bard v. Boston Shipping Ass’n, 471 F.3d 229, 244 (1st Cir.2006)(finding prejudice toward the participant because of the administrator’s procedural failures — failure to inform participant what he needed to show for disability eligibility, failure to provide for appeal before entity independent from administrator, and failure to consult medical expert); see also Booton v. Lockheed Med. Ben. Plan, 110 F.3d 1461, 1464 (9th Cir.1997)(stating that “to deny [a] claim without explanation and without obtaining relevant information is an abuse of discretion”); Blau v. Del Monte Corp., 748 F.2d 1348, 1353-54 (9th Cir.1984)(finding that the defendants’ failure to comply with “virtually every applicable mandate of ERISA” was “objectionable”; the defendants did not provide a copy of the relevant plan provisions or any reasonable claims procedure). 2. Procedural Requirements Governing Top Hat Plans Plaintiff argues that the Compensation Committee violated ERISA’s procedural mandates when considering her claim for benefits because it did not properly follow the statutory notice provisions and full and fair review requirements. Section 503 of ERISA provides that every employee benefit plan shall: (1) provide adequate notice in writing to any participant or beneficiary whose claim for benefits under the plan has been denied, setting forth the specific reasons for such denial, written in a manner calculated to be understood by the participant, and (2) afford a reasonable opportunity to any participant whose claim for benefits has been denied for a full and fair review by the appropriate named fiduciary of the decision denying the claim. 29 U.S.C. § 1133. Section 503 falls under the administration and enforcement part of ERISA, which, like the part related to reporting and disclosure, contains no exception for top hat plans. In contrast, top hat plans are explicitly exempted from the statutory parts related to participation and vesting, funding, and fiduciary responsibility. See 29 U.S.C. §§ 1051(2), 1081(a)(3), 1101(a)(1). At the beginning of each of those parts, there is a section entitled “Coverage,” which exempts plans that are “unfunded and ... maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees,” otherwise known as top hat plans. Id. Top hat plans are not excused from ERISA’s civil enforcement provisions, including § 503. See Hampers v. W.R. Grace & Co., Inc., 202 F.3d 44, 47 n. 3 (1st Cir.2000); O’Leary v. Provident Life & Accident Ins. Co., 456 F.Supp.2d 285, 289 n. 3 (D.Mass.2006) (“[W]hile a ‘top hat’ plan is exempt from certain ERISA requirements, it is not exempt from ERISA’s reporting, disclosure, administration, or enforcement provisions.”); In re New England Mut. Life Ins. Co. Sales Practices Litig., 324 F.Supp.2d 288, 309 (D.Mass.2004)(stating ‘top hat’ plans are subject to ERISA’s criminal and civil enforcement provisions); see also Paneccasio v. Unisource Worldwide, Inc., 532 F.3d 101, 108 (2d Cir.2008) (“Top hat plans ... are exempt from many provisions of ERISA, including the participation and vesting, funding, and fiduciary responsibility requirements ... but like qualified plans, they are subject to disclosure requirements, to civil enforcement, and to the duty to have a claims procedure.” (quoting Eastman Kodak Co. v. STWB, Inc., 452 F.3d 215, 217 (2d Cir.2006)(internal quotation marks omitted))). The Secretary of Labor has promulgated regulations which describe the requirements of § 503 in more detail. See 29 C.F.R. § 2560.503-1. The claims procedure regulations require employee benefit plans to “establish and maintain reasonable procedures governing the filing of benefit claims, notification of benefit determinations, and appeal of adverse benefit determinations.” § 2560.503-1(b). If a plan administrator makes an adverse benefit determination, the regulations require that the administrator give notice of the determination. § 2560.503-1(g). The notice must set forth: (i) The specific reason or reasons for the adverse determination; (ii) Reference to the specific plan provisions on which the determination is based; (iii) A description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary; and (iv) A description of the plan’s review procedures and the time limits applicable to such procedures, including a statement of the claimant’s right to bring a civil action under section 502(a) of the Act following an adverse benefit determination on review. Id. Along with proper notice, the regulations also require that these employee benefit plans shall “establish and maintain a procedure by which a claimant shall have a reasonable opportunity to appeal an adverse benefit determination to an appropriate named fiduciary of the plan, and under which there will be a full and fair review of the claim and the adverse benefit determination.” § 2560.503—1(h)(1). “Full and fair review” of a claim and an adverse benefit determination requires that claimants be provided: (i) At least 60 days following receipt of a notification of an adverse benefit determination within which to appeal the determination; (ii) The opportunity to s