Boeing Co. BA agreed to pay $57 million to resolve a nine-year-old lawsuit accusing the company of messing up its 401(k) retirement plan to the detriment of its employees.
The case was a class action lawsuit on behalf of 190,000 existing and retired Boeing employees alleging that the company failed to fulfill fiduciary responsibility toward those employees. The case accused Boeing of allowing 401(k) fees to go unchecked, choosing higher retail mutual funds over cheaper options and making planned decisions that benefited vendors receiving other company business.
Boeing has defended its 401(k) practices and denied the claims. The company had earlier stated that all plan investment options and fees were carefully monitored, prudent and in line with the best practices in the 401(k) industry. Tony Parasida, a Boeing senior vice president of human resources and administration, mentioned in a statement to company employees that “This settlement is a reasonable approach to avoid the additional expense of continued litigation." He clarified that the settlement "[is] not an admission of wrongdoing, and Boeing maintains that it has prudently managed and overseen the VIP or Voluntary Investment Plan at all times."
The $57 million will be distributed among people who participated in the plan between 2000 and 2006, after subtracting court-awarded attorney fees, and costs and expenses of administering the settlement.
Of late, companies like Boeing or Lockheed Martin Corp. LMT are more in favor of defined-contribution 401(k) plans rather than defined-benefit pension plans. However, under the former system, employees have to bear the investment risk and it can be difficult selecting investment options and pointing out which ones offer the lowest fees.
In Dec 2014, defense prime Lockheed Martin reached a $62 million settlement in the week its trial was set to begin. It has been the highest payout so far in this kind of a lawsuit.
Zacks Rank
Boeing currently holds a Zacks Rank #3 (Hold). Some better-ranked stocks in the same sector include Leidos Holdings, Inc. LDOS and General Dynamics Corp. GD. While Leidos Holdings sports a Zacks Rank #1 (Strong Buy), General Dynamics holds a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment