NEW YORK — For workers, the lesson of Enron's collapse is supposed to be that they shouldn't put all their retirement eggs in one basket of stock. But that is a lesson some of the nation's biggest companies and their employees have all but ignored.
Some high-profile firms — including Procter & Gamble, Coca-Cola and McDonald's — have packed their 401(k) plans with far larger proportions of company stock than Enron, according to a recent survey. In P&G's case, as much as 95 percent of all the assets in its retirement savings plan are in its own stock.
Many employees are opting to put their own retirement contributions into company stock. Companies often make their matching contributions in stock — with the condition that it remain untouched for years.
On average, 43 percent of the savings in retirement plans run by the nation's largest employers are comprised of their own stock, according to figures from the Profit Sharing/401(k) Council of America, which represents the firms.
But at some firms the number is much, much higher, according to research by an industry newsletter, DC Plan Investing.
At Sherwin-Williams Co., the Cleveland-based paint maker, nearly 92 percent of all money in the retirement plan is in company stock. At pharmaceutical giant Pfizer Inc., the figure is more than 86 percent. At McDonald's, more than 74 percent of workers' nestegg is in company stock, according to the newsletter.
"To have a plan where participants are investing more than 90 percent of all assets in (any) stock is extremely high," said Ted Benna, a Pennsylvania retirement plan consultant generally regarded as one of the inventors of the 401(k) concept.
But to have the money all in a single, company stock is "even more alarming. I mean, come on, you've got to be real. There's no stock that warrants that level of ownership, I don't care who they are," Benna said.
To be sure, the circumstances were unique at Enron, where the company's stock price plunged just as the company locked its workers out of making any changes in their 401(k) savings.
But the list of other firms with especially high concentrations of their own stock in retirement savings programs include several that have seen their share price drop in recent years.
At Textron Inc., 70 percent of employees' retirement savings are in company stock that, in the past three years, has plummeted from $98 to less than $40 a share.
At Coke, more than 81 percent of the 401(k) is in company stock that has fallen from a high of more than $70 to less than $45.
At P&G, the balance in retirement accounts relies on stock that fell from a high of about $117 a share to as low as $56, before recovering to around $80 recently.
Bob Gustafson, 55, of Loveland, Ohio, retired from P&G in June, but doesn't blame the company for the huge drop in his savings.
"The fact that I was 100 percent in P&G when it went down was my own fault," he said. "I had opportunities to do some diversifying, but I didn't think the alternatives were as good because P&G had been doing so great."
Betty Lo, who has worked for seven years at the Coca-Cola Co. in Atlanta, said she invested a lot of her retirement savings in the company because of her faith in it and its management.
That faith remains unshaken, she said, but the drop in the company's stock price has convinced her to diversify over the past year.
"Since we have an option . . . to look at the direction we want to take in our future investing, that gives me hope. But at the same time, there's some hesitation or apprehension about what I've already invested," Lo said.
As was the case at Enron, a very large portion of the holdings at P&G and many other firms are the result of decisions by workers who believe in their company, have seen its stock price soar and bet their futures on it.
But overconcentration in company stock is notably higher at firms that funnel their stock into 401(k)s on top of the shares snapped up by employees, researchers say.
At companies that allow employees to put retirement funds in stock, but don't contribute the shares themselves, about 22 percent of assets in 401(k) plans are in company stock, according to a recent joint study by Employee Benefit Research Institute and Investment Company Institute.
But at firms that directed their own stock into retirement plans, 53 percent of all savings are in company stock.
At Enron, nearly 58 percent of assets were in company stock. At P&G the figure is 94.7 percent — the highest proportion of the 219 companies surveyed, according to DC Plan Investing.
P&G contributes stock to retirement accounts of even those employees who make no contribution of their own. It disputes the DC Plan Investing figure, saying that 92 percent of assets in its entire retirement plan are in company stock. Its 401(k), which is part of a broader retirement plan, is comprised of 87 percent P&G shares, the company said.
Many large companies that contribute their own stock to retirement funds prohibit workers from transferring the savings to other types of investments until they reach their 50s.
Some firms also require workers to park a portion of their own contributions in company stock, although that practice may be becoming less common.
Until late last year, for example, workers at Textron Inc. had to direct half their own contributions into company stock if they wanted to receive matching funds, which are entirely in company stock. The company changed the policy in response to workers' complaints.
Companies contend that such programs are designed to serve the interests of the firm and the workers.
"It certainly links the company and the employee together because we want employees to be owners of the company," said Martha Depenbrock, a spokeswoman for P&G.
Employees put their money in P&G stocks "because the stock has done well over time. It's a solid investment. It doesn't have the type of fluctuations that would associate with companies that are more cyclical," she said.
Employees are reluctant to publicly criticize company contributions of stock to retirement funds, or the policies that prohibit converting those savings to other types of investments. Experts say the difficulty in reshaping 401(k) plans is that many of the current provisions accomplish worthy goals — satisfying both employers' and employees' desire to share in the profits.
"Do you want to tell employees they can't invest in company stock if they want to?" said Jack VanDerhei, a Temple University professor who is an expert on 401(k) plans.
The choices are just as difficult on the employer side of the equation, he said.
"Many of the sponsors say if they can't put in company stock they won't make any contributions," VanDerhei said. "If you ask anybody would you rather have a contribution in company stock or no contribution at all, I think that's a no-brainer."