Up Front: ESOP FABLES
UNITED WORKERS: WE WUZ ROBBED!
UNITED AIRLINES' WORKERS overpaid more than $1 billion for the carrier last year, alleges a federal suit filed by three employees. To implement their employee stock ownership plan, or ESOP, United workers made $5 billion in wage and work-rule concessions in return for 55% of the company's shares.
The dissidents' attorney, Kevin McBride, figures the concessions were worth about $200 a share. But workers received stock that started trading at $88. Even though workers paid extra for control of the company, McBride says the price was too high. The suit targets the ESOP's trustee, State Street Bank & Trust, which was supposed to make sure the deal was fair. The bank insists it acted in the employees' best interests. United itself is not named.
Will the suit fly? Since ESOPs started in 1974--there are 10,000 now--only 75 suits have been filed alleging overpricing. Employees have won half of them, reports the National Center for Employee Ownership. The center's executive director, Corey Rosen, says plaintiffs often lose if the stock is rising. UAL's stock price has risen 30%, to $115 since the deal went through.Susan Chandler EDITED BY LARRY LIGHT, WITH OLUWABUNMI SHABI