Global Crossing Head Willing to Make Up – Some – 401(k) Losses

October 2, 2002 (PLANSPONSOR.com) - In a dramatic gesture yesterday, Global Crossing Chairman Gary Winnick said he and his family would personally make up $25 million of the losses incurred by workers in the firm's 401(k) plan.

Not only did Winnick make the promise in front of a hostile House subcommittee hearing, he also challenged other company executives – specifically those at XO, Qwest Communications, and McLeodUSA – to follow his example.   ‘Step right up and write a check,’ he said, according to Dow Jones.

Duty ‘Bound’

Winnick strenuously denied that he or others at the company had engaged in insider trading or fraud.   However, he said that as chairman of the ailing company, he owed it to the firm’s 14,000 current and former employees to make them whole for the losses they suffered as the value of their 401(k) accounts plummeted along with the company’s share price.

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He said he wanted to help the “Miss Crumplers of the world,” appearing  after hours of testimony from former Global Crossing employees, including Lenette Crumpler who told the committee she lost her entire 401(k) savings from a 31-year period — $86,000 — when Global Crossing went bankrupt in January (see  Global Crossing Workers File Company Stock Suit ). Global Crossing had acquired the telephone company Crumpler worked for, Frontier, in 1999.

Zero Sum?

While subcommittee chairman Representative Jim Greenwood (R-Pennsylvania) described Winnick’s $25 million offer as “magnanimous,” others were skeptical, if not cynical.  ‘I think he needs to add a zero to it,’ said attorney Lynn Sarko, who represents Global Crossing workers, saying the offer was less than one-tenth of the losses Global Crossing employees had suffered.  Indeed, Representative Greenwood commented that investors had lost $54 billion in the collapse of Global Crossing.

Sarko, a Seattle attorney, noted that Winnick was only offering to pay back what employees had contributed to the retirement plan after Global Crossing acquired Frontier in 1999, and not the amounts they had paid in prior to that time.

Joseph Nacchio, the former Qwest chief executive who testified later Tuesday, firmly refused to follow Winnick’s ‘lead.’ Nacchio sold $235 million in Qwest stock but said the company is not bankrupt and maintains retirement plans. 

“Mr. Winnick’s company went bankrupt. Qwest is not a bankrupt company,” Nacchio said. “It has a pension plan, and there are lots of reasons why the telecommunications industry is on hard times.”  Nacchio, ousted from Qwest in June, said his own severance package was worth about $12 million, according to Reuters (see  Shareholders Name Qwest, Nortel in 401(k) Suits ).

Severance ‘Check’

Separately, WorldCom got approval to pay full severance payments to thousands of laid-off workers whose termination benefits were abruptly cut off in July when the nation’s No. 2 long-distance carrier filed for bankruptcy-court protection.   Judge Arthur Gonzalez of the U.S. Bankruptcy Court for the Southern District of New York approved the request to pay a total of about $36 million in severance, commissions, health insurance premiums, and unused vacation pay to laid off workers.

In order to get their severance, employees must sign a release that bars them from later suing the company. The release has been criticized as overly broad, leading some employees to fear it would interfere with efforts to sue over losses in their 401(k) retirement plans.

Senate Panel Considers Contraceptive Coverage

September 14, 2001 (PLANSPONSOR.com) -A Senate panel hearing on legislation that would require contraceptives to be covered under private health plans has brought the bill is one step closer to becoming law.

The Equity in Prescription Insurance and Contraceptive Coverage Act would require health plans that cover prescription drugs to include the same level of coverage for prescription contraceptives that are approved by the Food and Drug Administration.

After failing to become law following its introduction in 1997, the bill was re-introduced this year by Senators Olympia Snowe (R-Maine) and Harry Reid (D-Nevada). Proponents hope the bill will move forward before the close of 2001.

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A number of states have passed their own laws requiring employers to provide contraceptive coverage, but the bill’s advocates take the view that federal legislation is necessary.

For and Against

Advocates of the bill see prescription contraceptives as crucial to women?s health and say the costs for employers will be minimal, arguing that since federal workers’ health plans began covering contraceptives in 1999, there has been no increase in health insurance premiums.

Opponents of the bill, such as the US Chamber of Commerce argued that the legislation would raise employers’ costs by mandating contraceptive coverage.

Picking up Steam

The issue came to the fore in June after a federal ruled that employers could not exclude prescription contraceptives from a woman’s health insurance coverage if they covered other prescription drugs.

The federal judge found that pharmacy chain Bartell Drug Company had discriminated against female employees by not providing birth control as part of its health coverage and ordered Bartell to cover all forms of prescription contraception.

– Camilla Klein                    editors@plansponsor.com

See Also Contraception Coverage May Be Required

See Also Viagra Coverage Uncovered, Says California Judge

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