Lockheed Martin, the global security and aerospace company, is in settlement talks with former employees that alleged the company imposed excessive 401(k) plan fees.
In a pretrial order signed by Chief Judge Michael J. Reagan, both parties in the Abbot v. Lockheed Martin case have reached a provisional settlement, according to court documents. Effective on Dec. 16, the bench trial was formally cancelled.
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Jennifer Allen, a spokeswoman for Lockheed Martin, confirmed that a provisional settlement has been reached, but the details of the agreement are still being finalized. Emails placed to the plaintiffs attorney, Jerome Schlichter, of Schlichter, Bogard and Denton, were not immediately returned.
Previously, the class-action lawsuit, first filed in 2006, included participants within the companys two defined contribution plans the Salaried Savings Plan and the Hourly Savings Plan. The workers alleged that Lockheed Martin Investment Management Company the companys in-house investment management arm exposed retirement plan participants to improper investment options. Court documents from Aug. 2013 highlight participants had access to a stable-value fund and company stock options.
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Lockheeds SVF [stable-value fund] was heavily invested in short-term money market investments. This resulted in a low rate of return, such that in Lockheeds own words, the SVF did not beat inflation by a sufficient margin to provide a meaningful retirement asset, the complaint stated.
At the time, plaintiffs contended that structuring the SVF in this manner amounted to imprudent management and violated Lockheeds duty to manage the Plan with care, skill, prudence, and diligence under the circumstances.
