Consumer products giant Colgate-Palmolive (CL) has put forward a $332 million agreement to settle a class-action lawsuit filed by its former employees. The retirees had dragged the American company to court in 2016, alleging inaccurate calculation of their pensions.
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The deal, which is a preliminary settlement, was lodged on Friday in a federal Manhattan court, following years of contention in court over the case. The proposed arrangement, however, still awaits a judge’s approval.
If the agreement is approved, 1,177 retirees are expected to collectively receive about $232.7 million, minus lawyers’ fees and expenses. Colgate-Palmolive noted that the decision to settle was not an admission of wrongdoing, but it was to avoid the risk and cost of additional litigation.
Colgate’s Pension Plan Comes Back to Bite
The bone of contention in the case dates back nearly four decades ago when Colgate switched its pension arrangement to a cash balance plan. The plan enables employees—who get a hypothetical account that is funded yearly with a guaranteed interest—to get their retirement benefit as a lump sum.
In 2005, Colgate modified the plan to award, in retrospect, a lifetime monthly payment (also called an annuity) to employees who got lump sums under its older pension arrangement. However, retirees under the class-action argued that the multinational was not exact in its calculation of these payments.
As of Tuesday afternoon, Colgate-Palmolive’s shares were trading about half a percentage point up at around $84 a share. However, the stock has shed 22% of its value since the start of the year.
Is CL a Good Stock to Buy?
In August, several Wall Street banks lowered their price targets for the New York-based producer of household, health, personal care, and veterinary products.
For instance, Morgan Stanley (MS) trimmed its price target for CL stock to $96 from $104. The investment bank noted that the company’s second quarter 2025 results “should do little to change the debate on Colgate.” However, the banker maintained its Overweight rating on the stock.
On TipRanks, Colgate-Palmolive’s stock has a Moderate Buy consensus recommendation based on 13 Wall Street analysts’ assessments. This is based on nine Buy, three Hold, and one Sell ratings.
The average CL price target by analysts over the last three months is $97.15, which is a nearly 15% upside potential from the current level.
