(Bloomberg) — Lockheed Martin Corp. agreed to pay $62 million to end a lawsuit over claims it shortchanged 120,000 workers and retirees who participated in its pension plans.
The beneficiaries accused the defense contractor of subjecting them to excessive management fees and leaving those who invested in the company stock fund with returns that were worse than if they’d bought shares on the open market.
While a settlement in principle was announced on the eve of trial in December, the parties only Friday revealed the dollar amount in a court filing seeking preliminary approval of the deal.
Lawyers for the plan participants said in a statement the sum is the greatest ever paid by a single employer to resolve such a suit. Their clients sought $1.3 billion in damages.
The accord requires approval from U.S. District Judge Michael Reagan in East St. Louis, Illinois.
The Bethesda, Maryland-based company admitted no wrongdoing.
“Lockheed Martin has agreed to settle this matter so that we can return our focus to the critical and important work we are performing for our customers,” the company said Friday in a statement.
The lawsuit was filed in 2006 by the St. Louis law firm Schlichter Bogard & Denton LLP, which has waged similar battles with mixed success against Swiss generator-maker ABB Ltd., power generating company Exelon Corp. and Caterpillar Inc., the Peoria, Illinois-based earth-moving equipment maker.
Schlichter initially won an award of more than $35 million against ABB’s U.S.-based unit and Fidelity Management Trust Co. Last month, the U.S. Supreme Court declined to reinstate $21.8 million that was cut from that on an appeal.
The Caterpillar case settled for more than $16 million in 2010. The case against Chicago-based Exelon was thrown out.
Lockheed employees and retirees claim they were charged “unreasonable and excessive” fees that weren’t incurred solely for their benefit and weren’t disclosed, according to an amended complaint filed in 2011. The company denied the allegations.
Mercer Bullard, a University of Mississippi law professor and founder of Fund Democracy, an advocacy organization for mutual fund shareholders, said he believed the Lockheed accord was the largest publicly disclosed settlement in a pension plan management case.
He credited lead plaintiffs’ lawyer Jerome Schlichter and new U.S. Labor Department regulations with driving down adviser fees nationwide.
The case is Abbott v. Lockheed Martin Corp., 06-cv-00701, U.S. District Court, Southern District of Illinois (East St. Louis).
–With assistance from Margaret Collins in New York.