According to the complaint filed in the U.S. District Court for the District of Oregon, prior to November 19, 2009, the Jeld-Wen ESOP governing plan document provided that a plan participant who had separated from service but was not yet 55 years of age and was therefore ineligible for early retirement, would have his or her vested accrued benefit under the plan calculated based on the year-end valuation of Jeld-Wen stock in the year that he or she terminated employment. That value would be placed in an “Undistributed Account” and continue to accrue interest at 3% until the plan participant was qualified to receive and received a full distribution of his or her benefits under the plan document.
The former employees first claim that fiduciaries of the ESOP did not prudently invest sufficient assets of the plan, including by not investing the assets of the plan in diversified investments, so that it could honor its obligation and pay the benefits that were unrelated to the current value of Jeld-Wen stock.
In 2008, the value of Jeld-Wen stock began to decline. Between December 31, 2007, and December 31, 2011, the value of Jeld-Wen stock declined more than 70%, the complaint says. This decline combined with the number of separated employees resulted in the Jeld-Wen ESOP facing the prospect of a shortfall. So, in November 2010, Jeld-Wen amended the plan to change the value and amount of the vested and accrued benefits of separated employees.The amendment eliminated the 3% rate of interest and provided that the “Undistributed Accounts” would be valued based on the current value of company stock.The amendment also permitted the assessment of new expenses against the accounts of all participants in the ESOP, including separated employees.
According to the complaint, plaintiffs’ benefits based on or maintained in the “Undistributed Accounts” declined by more than 43% as a result of the decline in Jeld-Wen stock and were assessed expenses totaling 8% of the balances. The former employees charge that this violates the anti-cutback provision of Section 204(g) of the Employee Retirement Income Security Act (ERISA). In addition, they allege the administrative committee of the Jeld-Wen ESOP violated its obligations to discharge their duties solely in the interest of participants and beneficiaries, and for the exclusive purpose of providing benefits to the participants and beneficiaries, with care, skill, prudence and diligence.
They are seeking class action status and for the court to order that the amount separated participants will receive as an accrued benefit under the plan will be calculated as if the 2010 ESOP amendment had never been adopted. The lawsuit also asks that Jeld-Wen and other defendants pay the difference, plus interest, to or on behalf of class members who received less in benefits than the amount to which they were entitled.The complaint in Jimerson v. Jeld-Wen Inc. is here.
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