DALLAS - For the pension staffs of companies acquired by Northrop Corp., history has a nasty way of repeating itself.
They lose their jobs.
In the latest case, Thomas K. Witt, director-employee benefit fund investments at Vought Aircraft Co., was terminated effective Feb. 28.
Northrop is absorbing Vought's approximately $550 million in pension assets, following the acquisition of Vought by the Los Angeles-based aerospace defense contractor.
Last year, Northrop acquired Grumman Corp., terminating a nine-person pension and investment staff, disbanding Grumman's in-house management operation and absorbing about $2.8 billion in Grumman pension assets.
With Vought, Northrop Grumman's pension assets will swell to almost $7.5 billion, almost twice the $4 billion Northrop held before its acquisition expedition began.
Like Grumman's before it, Vought's pension assets have been placed under the direction of Rose Mary Ableson, director-trust administration and investments at Northrop. That means Mr. Witt, like Grumman Assistant Treasurer William R. Parmentier, is out of a job.
The Vought pension assets were being managed by 19 external managers in a broadly diversified portfolio. Grumman's assets were managed internally by Mr. Parmentier and eight staff members, who also were terminated.
Grumman's pension assets were transferred to J.P. Morgan Investment Management Inc. in the summer. Vought's assets so far have been left with Vought's money managers.
Northrop Grumman officials have been meeting with some of Vought's managers to become more familiar with the firms and their investment styles.
Among them is Gulfstream Global Investors Ltd., Dallas, which manages an emerging markets equity portfolio for Vought.
"I think they are asking the right questions and are not jumping to conclusions; they took the time to get to know us and to find out how we do what we do," said Tom Tull, Gulfstream's chief investment officer. "We had a good feeling about it .*.*. I think they are trying to do this with all the (Vought) managers. It appears they are doing their homework."
Meanwhile, Mr. Witt said he plans to seek employment with another plan sponsor or may consider establishing his own manager of managers business.
Mr. Witt said he was not informed by Northrop Grumman officials about how the Vought plan would be assimilated. He said he is "disappointed" Northrop Grumman decided not to allow him to continue overseeing the Vought assets.
All calls to Ms. Abelson were referred to a corporate spokesman, who declined comment.
Pension industry observers aren't surprised by the turn of events. As one noted: "Whatever the philosophy and corporate culture of the acquiring company is, usually seems to be the one which is likely to be implemented.
"Usually all the plans will be rolled into a single master trust because they consider it a waste of time and effort to have two or, in this case, three different (pension) programs operating at the same time," he said.
At the time of the Grumman takeover, a Northrop official said the company would conduct an asset/liability study before deciding how assets of both companies would be allocated.
Vought's fund had about 40% domestic equities, 28% foreign equities, 20% bonds, 6% real estate, 3% venture capital and 3% cash. In 1993, Northrop had about 58% equities, 36% fixed income and 6% cash. In its last year as a separate fund, Grumman had about 35% equities, 38% fixed income, 20% cash, 3% real estate, 3% mortgages and 1% in private placement equity deals.
"As the fund has grown following the Grumman acquisition, they (Northrop) have been through this exercise already," said William T. Cleary Jr., national practice leader-defined benefit services at Sedgwick Noble Lowndes, Melville, N.Y.
"They have probably already reviewed their investment objectives and incorporated the Grumman assets to fit those objectives. They probably won't have to change much about the Vought plan because of its much smaller size," said Mr. Cleary.
2
