Compliance February 18, 2011

Final Settlement of Ford Stock-Drop Suit Reached

After five years of litigation, a judge gave final approval to a settlement of a suit accusing Ford Motor Co. of continuing to offer company stock in its 401(k) plan when it was no longer prudent to do so.
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The U.S. District Court for the Eastern District of Michigan ordered Ford to pay nearly $1.5 million in attorneys’ fees and costs. However, the settlement called for non-monetary concessions for plan participants. Ford will provide free financial advice for four years to hourly and salaried retirees and employees who invested in Ford stock since April 2000 (see “Ford Settles Company Stock Suit with Advice“).  

The company will also warn plan participants whose investments in Ford stock exceed 20% of their total plan holdings that they may want to consider diversifying. Ford also agreed that if it provides a company match to retirement plans during the next three years, the contribution will come in cash, not Ford stock as it has done in the past.  

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According to BNA, other provisions of the settlement include: 

  • Fiduciary training for plan fiduciaries at least once a year for four years
  • Enhanced communications with plan participants describing the importance of diversification
  • During the three-year period following approval of the settlement, when matching contributions are made, participants will first get a chance to select their investments, but if no investments are selected, then the match will be invested in a qualified default investment alternative, which is currently a target date retirement fund. 

The case is In re Ford Motor Co. ERISA Litigation, E.D. Mich., No. 06-cv-11718.

Products February 17, 2011

Newport Launches Executive Benefits Benchmarking Tool

The Newport Group introduced a Focus on Total Rewards benchmarking analysis, which provides comprehensive intelligence about executive benefits.
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Available exclusively to Newport clients and intermediary partners, the service helps companies create effective reward, retention and retirement strategies, the firm announced.

Newport’s proprietary Focus on Total Rewards report identifies an array of insights: the types of executive benefit plan features offered, eligibility requirements, plan participation statistics, deferral sources, vesting, distribution options, and funding alternatives—as well as the prevalence of these features among their peer companies. It also shows the competitive economic value of these benefits across peer groups.  

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The information in the report was compiled by a partner of Newport, the Main Data Group, a research and consulting company and source of executive benefit and total reward information. Content is derived from a vast array of publicly available information including proxy statements, 10k, 11k, and plan document filings, and is included in the report together with proprietary information gathered by Newport.  

“Recent surveys indicate that executive benefit plans continue to be a significant part of a company’s total compensation,” said Newport CEO Bryant Kirk. “Over 90% of Fortune 1000 companies offer one or more of these plans to their executives. Knowing what specific plan features one’s peers are offering to key talent can be a critical barometer for assessing the effectiveness of your own company’s program.” 

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