Share
Explore BrainMass

In its heyday, Consolidated Electric was an industry leader

In its heyday, Consolidated Electric was an industry leader in the wages and benefits it paid its employees. Their pension plan was among the best in the business. Additionally, when employees retired, the company continued to pay their premiums for participation in the corporate health insurance plan. In recent years, health insurance premiums soared while Consolidated's profits declined as a result of foreign competition and the need to make major investments in plant and equipment.

The board is considering whether to discontinue health insurance benefits for retirees. The VP of Human Resources points out that many retirees depend on this company benefit and might not be financially capable of obtaining alternative insurance at their own expense. She argues that at the very least, the company is ethically obligated to continue benefits for current retirees. The CFO counters that Consolidated's first priority is its shareholders, who expect profits to be maximized.

Is Consolidated either legally or ethically obligated to continue the health insurance benefits for retirees?

Solution Preview

In its heyday, Consolidated Electric was an industry leader in the wages and benefits it paid its employees. Their pension plan was among the best in the business. Additionally, when employees retired, the company continued to pay their premiums for participation in the corporate health insurance plan. In recent years, health insurance premiums soared while Consolidated's profits declined as a result of foreign competition and the need to make major investments in plant and equipment.

The board is considering whether to discontinue health insurance benefits for retirees. The VP of Human Resources points out that many retirees depend on this company benefit and might ...

Solution Summary

In its heyday, Consolidated Electric was an industry leader in the wages and benefits it paid its employees. Their pension plan was among the best in the business. Additionally, when employees retired, the company continued to pay their premiums for participation in the corporate health insurance plan. In recent years, health insurance premiums soared while Consolidated's profits declined as a result of foreign competition and the need to make major investments in plant and equipment.

The board is considering whether to discontinue health insurance benefits for retirees. The VP of Human Resources points out that many retirees depend on this company benefit and might not be financially capable of obtaining alternative insurance at their own expense. She argues that at the very least, the company is ethically obligated to continue benefits for current retirees. The CFO counters that Consolidated's first priority is its shareholders, who expect profits to be maximized.

Is Consolidated either legally or ethically obligated to continue the health insurance benefits for retirees?

$2.19