The disclosure was contained in Lucent’s quarterly report filed with the Securities and Exchange Commission (SEC), according to a report in the Wall Street Journal. The suit, filed July 25 in New Jersey District Court, was filed under the Employee Retirement Income Security Act (ERISA).
The suit reportedly alleges that the company breached its fiduciary duties by continuing to offer the company’s stock as an investment option in its long-term savings plan for management employees and retirement savings and profit plan.
The plaintiffs say that Lucent and its executive officers were aware of numerous business problems that made Lucent’s stock inappropriate for retirement investment. The suit also alleges that Lucent introduced new plan provisions last year that were designed to protect the plan’s fiduciaries from liability to participants and beneficiaries of the plans.
Earlier this month Federal-Mogul announced that it was discontinuing its company stock program due to its concerns over its falling stock price and asbestos litigation that could further impact the stock (see Federal-Mogul Co. Stock Decision Unique, But Wise: Observers ).
The Lucent suit is seeking monetary relief, injunctive and equitable relief, interest and fees and expenses associated with litigation, according to the filing.
Lucent says it intends to defend this action vigorously.
In the same filing, Lucent disclosed that it will pay ousted former chairman Richard McGinn a severance package that includes a $5.5 million one-time payment as well as assumption of $4.3 million in bank loans. McGinn already receives about a pension of about $1 million a year.
Lucent’s former chief financial officer, Deborah Hopkins, received a one-time payment of $3.3 million under her severance package, according to the filing.
– Nevin Adams email@example.com