The Detroit News reports that Kmart will have to pay some 71,000 current and former employees about 18 percent of what they lost on the company’s stock when the company filed for bankruptcy in 2002.
The payments will be made after a federal judge ruled that Kmart had a fiduciary responsibility to sell the stock in the company’s retirement savings plan once it realized the organization was in decline.
However, the payouts are not likely to be life-changing events for the employees, many of whom lost their jobs and their retirement savings when the company went under. After attorneys’ fees are paid, about $10 million will be available for disbursement. The average payout will be $162, though some employees will get as much as $37,000.
The News writes that “the employees and retirees held about $300 million in Kmart stock in March 1999, but the value had fallen to about $55 million when Kmart declared bankruptcy.” The suit actually had been filed against Kmart’s former senior executives, but insurance will cover the payments. Sears Holding Corp., which now owns Kmart, will have to cover about $200,000 in administrative costs.
It is just the last in a long line of disappointments for former Kmart employees. The News writes that “a federal suit brought by shareholders against the company's former officers was dismissed in 2003. The U.S. Attorney's Office in Detroit declined to bring charges against the company's former directors and officers following a nearly four-year investigation.
“The U.S. Securities and Exchange Commission filed civil charges last year against Kmart's former Chairman and CEO Charles C. Conaway and former Chief Financial Officer John T. McDonald. Both have asked a federal judge to dismiss the case.”
The payments will be made after a federal judge ruled that Kmart had a fiduciary responsibility to sell the stock in the company’s retirement savings plan once it realized the organization was in decline.
However, the payouts are not likely to be life-changing events for the employees, many of whom lost their jobs and their retirement savings when the company went under. After attorneys’ fees are paid, about $10 million will be available for disbursement. The average payout will be $162, though some employees will get as much as $37,000.
The News writes that “the employees and retirees held about $300 million in Kmart stock in March 1999, but the value had fallen to about $55 million when Kmart declared bankruptcy.” The suit actually had been filed against Kmart’s former senior executives, but insurance will cover the payments. Sears Holding Corp., which now owns Kmart, will have to cover about $200,000 in administrative costs.
It is just the last in a long line of disappointments for former Kmart employees. The News writes that “a federal suit brought by shareholders against the company's former officers was dismissed in 2003. The U.S. Attorney's Office in Detroit declined to bring charges against the company's former directors and officers following a nearly four-year investigation.
“The U.S. Securities and Exchange Commission filed civil charges last year against Kmart's former Chairman and CEO Charles C. Conaway and former Chief Financial Officer John T. McDonald. Both have asked a federal judge to dismiss the case.”
- KC's View:
- We can only imagine the betrayal felt by many of these Kmart employees. We also hope that not too many of them followed up their Kmart careers by going to work for Albertsons or Winn-Dixie.
