Krispy to Settle With Workers
Krispy Kreme Doughnuts Inc. has reached a proposed $4.7-million settlement with workers who claimed they lost millions of dollars in retirement savings because company executives hid evidence of declining sales and profit, the company announced Monday.
A class-action lawsuit was filed in federal court in Greensboro, N.C., last year for workers who owned stock in the company’s retirement or stock ownership plans after Jan. 1, 2003 -- around the time the company’s sales began to decline.
Because the executives said nothing about the company’s troubles, the suit claims, workers who bought Krispy Kreme stock for their 401(k) accounts or were paid stock in bonus plans had no way of knowing what top executives knew: that the stock was a risky investment.
The executives should have sold the stock from the plans when the investment became “imprudent,” the suit says.
The settlement, which is not expected to get final approval from the court until late 2007, would include a one-time cash payment to Krispy Kreme’s insurer. Krispy Kreme also would merge its profit-sharing stock ownership plan with the company’s 401(k) plan, the company said.
Krispy Kreme and individual defendants deny any wrongdoing in the proposed settlement.