By Liz Moyer
Lockheed Martin Corp. will pay $62 million to settle a civil
lawsuit that claimed its employee 401(k) retirement plan charged
participants excessive fees.
It is the largest settlement of its kind reached against a
single company, and one of more than a dozen cases in the past six
years that have focused on 401(k) plan practices.
In reaching the settlement, which a judge still has to approve,
the Bethesda, Md.-based defense company agreed to submit to monthly
evaluations of aspects of its plan, offer low-cost funds to
participants and solicit bids from at least three outside firms
that have experience handling the administrative aspects of large
company retirement plans.
"We are pleased to have achieved this historic settlement," said
Jerome Schlichter, a lawyer at the St. Louis firm Schlichter,
Bogard & Denton, who represented the plaintiffs.
The case had been headed to trial in December when a settlement
was reached. The terms were announced on Friday.
The Lockheed case, which was filed in September 2006, accused
the company of imprudently managing employee retirement savings in
funds that charged high fees, allowing a high level of employee
savings to be held in low-yielding money-market funds, and paying
excessive record-keeping fees. Lockheed Martin denied the
allegations.
"Lockheed Martin has agreed to settle this matter so that we can
return our focus to the critical and important work we are
performing for our customers," the company said in a statement.
"Lockheed Martin and the plaintiffs agree that the
settlement--which is less than 5 percent of the plaintiffs' claimed
damages--is not an admission of liability or wrongdoing."
The Lockheed retirement plan has 100,000 participants and $27
billion of assets, making it the fifth-largest 401(k) plan in the
U.S.
The case is one of 13 pending or settled cases that have accused
U.S. companies of failing to act in the best interest of employees
who participate in their 401(k) plans. The issues they raise
include failing to monitor excessive fees, favoring high-cost
retail mutual funds over lower-cost options and funneling employee
savings into investment products managed by affiliate
companies.
The U.S. Supreme Court is scheduled to hear arguments next week
in a similar lawsuit focused on the 401(k) plan offered by Edison
International, a California utility.
Write to Liz Moyer at liz.moyer@wsj.com
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