Account segregation to cash of ESOP stocks of terminated employees before company sale

[ESOPNovice]

I left the company few years ago and holds the ESOP stocks (not cash) in my ESOP account per yearly certificates issues by the previous employer. The company sent out a new letter mentioning they are allowing one time lump-sum distribution for terminated employees at the last years valuation otherwise they will convert the shares to cash next year per recently made plan amendment and distribute the cash in future per plan.

I suspect company is planning to get acquired and this is the way to get as much stock back as they can to sell it at higher when get acquired.

My question is can the employer change the plan terms like this and can they segregate the terminated employees to cash before company sale ?

What happens if the ESOP stocks and cash accounts  gets closed by the buyer of the company ?

My concern is I don't want to miss the upside (appreciation due to suspected sale) especially after company not letting the terminated employees cash segregated and have forced invested in company ESOP stocks for many years.

[ESOP Guy]

You are most likely not going to like my answer.  This is a very complex subject and I am hesitant to opine much on it.  

As a general rule they have the power to make all the changes you noted.   I can't help but notice you are speculating on the takeover part of the fact set.   So I am not going to go there.  

[ESOPNovice]

4 hours ago, ESOPNovice said:

My question is can the employer change the plan terms like this and can they segregate the terminated employees to cash before company sale ?

 

Thanks ESOP Guy. Isn't this non-fiduciary to keep the employees money locked in company shares and convert to cash segregated when they KNOW shares will be sold at higher price in a year or so during sale ?

[ESOP Guy]

If the fact set is as you say there can be a fiduciary issue regarding timing taking people out of the stock is based on knowledge of a pending company sale.  But if you knew that already why are you asking?  

However, at this point by your own admission you are speculating on a company sale.   You are making assumptions about motives without any evidence.

It is also very fact specific.   Are you sure they haven't been segregating people every year but just haven't gotten to you?  There is an order often times regarding who gets segregated first.  I have plenty of ESOP that segregate the terminated people with the oldest termination date first and work their way towards the current year.  They are years behind getting to the current year.  If they can show that is the pattern for years and it was simply your turn to be segregated that alone could change the whole analysis.  You need to know a lot about an ESOP before you can go off making the claims you are making.

[ESOPNovice]

1 hour ago, ESOP Guy said:

If the fact set is as you say there can be a fiduciary issue regarding timing taking people out of the stock is based on knowledge of a pending company sale.  But if you knew that already why are you asking?  

I do not know and that's why I asked.

 

1 hour ago, ESOP Guy said:

However, at this point by your own admission you are speculating on a company sale.   You are making assumptions about motives without any evidence.

The reason I am speculating is because previously they did not allow cash segregation (so keeping my cash value invested in company ESOP stocks) and now they made plan changes to allow one time lumpsum distribution offer this year or forced cash segregation next year. I am skeptical when people hand over money when they do not need to especially by amending the plan. they are not required to distribute to me for next few years under original plan.

 

1 hour ago, ESOP Guy said:

Are you sure they haven't been segregating people every year but just haven't gotten to you?

Yes because, the original plan did not mention about segregation whatsoever and the plan just changed for this one time offer.

[Maru422]

Alot of ESOPs don't have the cash to offer non-leveraged lumpsum distribution every year. It may take a number of years to accumulate enough cash to do so so the fact they did it likely has nothing to do with an ulterior motive, but more to do with addressing the "have nots".