The Department of Labor announced Wednesday that it has reached a settlement with the Cleveland-based Sherwin-Williams Co. that will provide $80 million to current and past participants of its Employee Stock Purchase and Savings Plan.
The agreement comes after the department’s Employee Benefits Security Administration investigated whether Sherwin-Williams, seeking to take advantage of tax breaks, improperly managed the plan in violation of the Employee Retirement Income Security Act.
The settlement also requires Illinois-based GreatBanc Trust Co. to undergo an audit of its pension plan activities.
Phyllis Borzi, assistant secretary of labor for EBSA, said in a statement announcing the settlement that “When fiduciaries expend retirement plan assets, they have to act with undivided loyalty to the plan participants and make sure that the plan receives full value for its money.” The fiduciaries’ job, she said, “is to manage plan investments to provide a secure retirement, not to help the plan sponsor secure tax breaks that are wholly disproportionate to the benefits actually provided to retirees.”
EBSA’s investigation focused on two transactions, one in 2003 and one in 2006, in which Sherwin-Williams and GreatBanc caused the plan to purchase specially designed stock issued by Sherwin-Williams solely for the purpose of the transactions. The investigation also looked at whether Sherwin-Williams had forwarded employee salary deferrals appropriately and promptly to their individual plan accounts, according to EBSA.