Conseco’s directors have approved the move that will add $5.4 million in value to 401(k) participant accounts. Continued funding with company stock would have only given plan participants $200,000. However, f und matches are not expected to until negotiations conclude on Conseco’s plans to restructure $6.5 billion in total debt.
The change was announced in an unsigned internal memo and is in response to Conseco’s declining stock price. After reaching a peak of $60 in 1998, Conseco’s stock has declined to 4.7 cents per share in over-the-counter trading as of the close of business on November 7 th .
“There is a trend starting to happen where companies get away from offering stock only as an employee match,” Patricia Beaty, general counsel for Sheridan & Associates, an Indianapolis-based employee benefits consulting firm, told the newspaper. “Whether that will continue, who knows? For now its simply a matter of liability”.
Conseco has seen recent legal activity surrounding the decline of the stock price. On October 24 th , a lawsuit was filed by a Louisiana man claiming current and former officers failed to properly manage and disclose key facts about the company’s 401(k), constituting a breach in their fiduciary duty. This in addition to a half-dozen other shareholder lawsuits filed since August.
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