Overland Park Sprint Nextel Corp. has agreed to pay almost $29 million to settle a class-action lawsuit filed by current and former employees who claim their retirement accounts were degraded by being tied to the company's stock.
U.S. District Judge John Lungstrum approved the agreement last week. It will cover more than 85,000 employees who had money in the company's retirement plan since 1998.
Lungstrum said the "conservative value" of the settlement was $25 million. He also said the company would pay $3.9 million in attorney fees and other expenses.
Susan Meagher, one of the plaintiffs' attorneys, said employees who file claims would each receive between $400 and $1,000 in cash, increased company matching for their retirement plans or other benefits. Sprint also will provide financial planning classes.
About 63,000 of the class-action members now work for Embarq Corp., the local telephone division that Sprint spun off to become a separate company in May, or no longer work for Sprint.
Company spokesman David Gunasegaram said the company's 401(k) plans follow federal regulations. He said company officials deny wrongdoing in the case, but agreed to a settlement to put the case behind them.
"We saw this as an opportunity to resolve this litigation in a manner that was mutually beneficial," Gunasegaram said.
Plaintiffs claimed in their lawsuit that the company's stock was too risky of an investment to be included in their retirement plans because, at the time, the company was laying the groundwork to switch from offering traditional telephone services to one that dealt only with wireless services.