The Department of Labor announced today that it will permit Northwest Airlines Corp. to contribute stock of an affiliate carrier, Pinnacle Airlines, to its pension plans instead of cash. It is an unusual move by the Department, designed to provide a solution for a struggling airline with an underfunded pension plan. Northwest’s three pension plans have hired an independent fiduciary to establish the fair market value of the Pinnacle stock and to see if the stock is a prudent investment for the plans. The plans cover about 72,850 employees nationwide. The company has obtained a waiver from the Internal Revenue Service to pay about $450 million in 2003 obligations over five years. The following sources report:
- Associated Press via Yahoo! News.com: “Northwest to Fund Pensions with Stock”
- Minneapolis Business Journal: “Northwest allowed to contribute Pinnacle stock to pension plans“
“Firms trim stock’s role in pensions“: Todd Mason for the Knight Ridder Newspapers via the Seattle Times reports.
William Hoffman for the Dallas Business Journal reports: “Company savings plans under watch in courts.” The article discusses the class action lawsuits being filed against companies with 401(k) plans funded with company stock. The article quotes Karl Nelson, partner in the labor and employment practice group at Gibson Dunn & Crutcher L.L.P. in Dallas, who recently won dismissal of a case brought in Rhode Island against Textron Inc. as saying: “What I’ve been telling folks … is that they need to give some thought to the way their plans are structured and take some prophylactic steps that maybe they weren’t thinking of when stocks were looking up.”
An interesting article from the Wall Street Journal (subscription required) on search engines–“Google Is Most Popular Search Site, But Others Sometimes Do It Better“–mentions a search engine I had not heard of called Teoma. According to the article, the search engine is built around finding the Web “communities” around a particular topic. I tried it and found it to be very helpful.