[Am-info] Stock options and pensions

[Sujal Shah]

It's pretty common practice these days in the tech industry... i would 
venture to say that most of the major "new technology" companies don't 
have a pension plan.  especially if the company did most of its growing 
after the 401K legislation was passed by Congress.

What John has described is why this legislation was passed.  And, let's 
be fair.   There's not just greed on the employers' parts.  Employees 
also saw potentially higher returns, since they could invest in higher 
risk funds (pension fund managers tend to be highly conservative in 
their investment choices since there is usually a guaranteed rate of 
return).  I know many people that had a choice and chose over time to 
move more and more money over to their 401K during the bubble days.   
What's even more interesting is that the mid to smaller techs usually 
don't match much of the 401K contribution.

The inquity is that for the employers, it's a no-lose /no-cost 
situation.  The employees are taking all the risk.  Call me a cynic, 
but this is also typical of legislation that major companies lobby for.

Sujal

On Sunday, November 17, 2002, at 09:19 AM, Erick Andrews wrote:

> On Sun, 17 Nov 2002 07:44:30 -0500, John J. Urbaniak wrote:
>
>> I watched a program on C-Span last night.  It was a seminar presented 
>> on
>> Sept 30, 2002 at the University of New Mexico.
>>
>> The speaker was reviewing various practices employed by large 
>> companies.
>>
>> She said that last year, stock options, if accounted for properly, 
>> would
>> have reduced Microsoft's reported income by one third.
>>
>> She also said that Microsoft has NO PENSION PLAN for its employees.
>> It's very hard for me to imagine how Microsoft can consider itself a
>> major company without a pension plan.
>>
>> Of course, a pension plan would also reduce the company's profits as
>> would a stock dividend.
>>
>> It astonishes me how such a sleazy company could be a member of the 
>> Dow
>> 30.
>>
>> John
>
> I've learned over the past couple years of several large corporations 
> putting
> the "squeeze" on existing employees to change from a 'Defined Benefit 
> Plan'
> for pensions to a 401K.  New employees often have no choice.  I recall 
> that
> IBM pushed for such changes three years ago, though I don't know where
> it currently stands.  Many employees revolted.
>
> What can be worse about a 401K for a pension is when the corporation
> requires a hefty percentage to be invested in them.  Ergo, Enron.
>
> I wonder who started this trend.  Maybe "successful" Microsoft?
>
> -- 
> Erick Andrews
>
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