Esop2

Thank you! So if an employee shareholder made an official compliant to DOL , for example, before addressing directly with fiduciary they are more likely to be protected by ERISA?

Thanks for the great feedback ! The knowledge of this group is a terrific resource. It seems like documentation of rationale for executive and board compensation is a key issue. Board members are not employees yet it appears they are receiving hundreds of thousands of dollars worth of stock appreciation rights along with employees in the Managment company ( the organization has a Managment Holding company that was spun off a few years ago and several operating companies) . Is it unusual for independent board members to be so richly compensated? Are board members and CEO typically considered fiduciaries or only the trustee? It seems like there is a valid argument with face validity for this group acting in their own best interest and NOT in the sole interest of beneficiaries and with the prudence of a well informed expert on the subject matter of pension fund governance. I understand about the circular hiring relationship with board and trustee in esop’s. It seems a bit absurd on the face of it , but understand that’s the law now. Has anyone had experience or heard of circumstances when group of average employees went directly to trustee to discuss significant concerns like this and ask for changes? There is no ESOP committee. Would that awareness after meeting and hearing about concerns create a greater level of accountability for her to ensure she performs her fiduciary responsibilities related to this SAR program and other matters like the board member selling and leasing property to the company (PT). We do know who trustee is. She is independent. However , she does not communicate directly with employees now. Not that she refuses to- just doesn’t currently make that a practice. How about retaliation to employees who question such a large cash drain by leaders. Does ERISA protect such action?

Our 100% ESOP S Corp has a SAR’s program for senior leadership and board members that creates a huge amount of synthetic equity. In fact synthetic equity is now almost 30 % of all outstanding shares of stock. At the end of this year this program will pay out almost 4 million dollars to these select shareholders.This is a company that only makes 5 million net income on average annually. It appears they are staying just within 409(p) testing , but they just merged the 401k with the ESOP to help with this ratio testing. I’m afraid they are going to get even more bold in coming years in creating more synthetic equity. Employees now need to contribute to 401k to get matching ESOP shares. I’m concerned that Managment and board may be acting unethically and hurting value of average employees retirement benefits. There is also some self dealing going on with leases and sales of builiding owned by board member to the company. Same three board members and CEO appear to be the main beneficiary of all this. Any recommendations about what to do next would be appreciated.