The Detroit News reports that under the proposed settlement, which must be approved in the U.S. District Court for the Eastern District of Michigan, Ford will provide free financial advice for four years to hourly and salaried retirees and employees who invested in Ford stock since April 2000. The company also will warn some employees and retirees with large holdings of company stock that they should consider diversifying their portfolios.
Ford will pay nothing to those who lost significant funds in retirement plans; however, it will pay up to $1.5 million in legal fees to the attorneys representing the employee and retiree shareholders, and will cover the costs of notifying individuals of the settlement. Ford did not admit to wrongdoing.
Ford also agreed that if it restores 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, according to the news report.
Last year, U.S. District Judge Stephen J. Murphy, III denied a motion to dismiss a case brought by participants of Ford Motor Co.’s employee stock ownership plans claiming the plans’ investment in Ford company stock was imprudent (see Federal Judge Allows Ford ESOP Suit to Move Forward).
The Detroit News noted that Ford employees have benefitted from the recent run-up in the price of Ford stock. The value of company stock held in retirement plans rose from $722 million at the end of 2008 to $2.7 billion last year.Ford’s turnaround is one reason the case is being settled without collecting any money for retirees or shareholders, according to the news report.