Techs Topple From Russell Reconstitution

June 25, 2001 (PLANSPONSOR.com) - Frank Russell Company has published the latest additions and deletions to its stock indexes, and technology stocks have taken a real drubbing in representation.

Of the 283 companies identified as preliminary candidates for deletion from the Russell 3000, nearly half (42%) are computer-related.

Overall, the total market capitalization of companies in the Russell 3000 will decrease about $1.5 trillion from where it stood at this time last year, to about $12.5 trillion, according to Russell.

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Russell adjusts the components of its stock indexes once a year to reflect current market capitalization and style attributes for the 3,000 largest US stocks at the end of May. The largest 1,000 companies in the ranking comprise the Russell 1000, while the remaining 2,000 companies become the small-cap Russell 2000 Index.

Final index membership will go into effect July 1 and remain in place for one year. The final rebalanced lists will be available July 9 on www.russell.com.

Tech Tumbles

Nationwide, 73 of the companies on the preliminary deletions list are in the Internet software/services industry, while just 13 such firms are on the additions list.

Russell notes that regional and savings banks as well as companies in oil and gas products, aerospace and defense, industrial machinery and apparel are stepping into the breach. At the same time, 16 real estate investment trusts are on tap to join the indexes as well as seven casino/gaming stocks.

Russell’s index rebalancing process also captures a tilt toward biotechnology firms with 54 of them set for addition to the Russell 3000.

Comings and Goings

Roughly a third (89) of the deletions slated are based in California. Other hard hit states are:

  • New York (31 companies)
  • Massachusetts (25)
  • Texas (18)
  • Virginia (16)

Ironically, the states making the largest gains look remarkably consistent, matching 4 of the top 5 deletion leaders. The states leading the gains on the additions list include:

  • California (97 companies)
  • New York (42)
  • Massachusetts (40)
  • Texas (39)
  • Pennsylvania (25)

Only about 150 initial public offerings will join the newly rebalanced Russell 3000 this year, down from 317 in 2000. However, that’s not much off of 1999’s 179 company representation, or the 183 IPOs added in 1998.

Only about 18 IPOs are likely to join the Russell 1000 Index, the largest companies in the index, down from 86 last year.

Managers Sue Ford For Reverse Discrimination

June 22, 2001 (PLANSPONSOR.com) - Two white managers for Ford Motor are suing the automaker, alleging they were passed over for promotions in favor of women and minorities.

The suits, filed yesterday in US District Court in Detroit, accuse the automaker of requiring that managers either meet quotas for hiring and promoting women/minorities or risk losing lucrative bonuses.

And, like a growing number of class action lawsuits, this one has a web site, http://www.fordmotorsclassaction.com .

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Passed Over?

In one suit, Ford Credit manager John Kovacs says he was repeatedly passed over for promotions and when he sent a letter of complaint to Ford chairman William Clay Ford Jr. through his attorney, he was placed on paid suspension.

The second suit involves Guy Bertram, a 49-year-old Ford management employee who says he was passed over for promotion several times because he is a white male.

David Murphy, Ford’s vice president of human resources, said there are no quotas per se, but that managers’ success at hiring and promoting women and minorities is a factor in their overall performance evaluation, according to an Associated Press report.

Making the Grade

Ford faces at least two other lawsuits filed by current and former employees who also say they were denied promotions or were terminated because of their age or for being white males (see  Ford Workers Give Performance System an “F”  .

Those lawsuits are targeting Ford’s Performance Management Program (PMP), which is used to evaluate some 18,000 top managers. The system has been in place for about a year. Plaintiffs say they had previously received positive evaluations, but that changed once the program was implemented.

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