Employee Stock Ownership after Enron: Proceedings of the 2003 Annual Meeting, Association of American Law Schools Section on Employee Benefits

This session is entitled Employee Stock Ownership After Enron, and I assume that title has drawn into this room people who know something about either Enron or employee stock, or both. For our purposes, the Enron story has as its focus the Enron 401(k) plan, which was the principal retirement plan for most Enron employees. Employees could make elective contributions to the 401(k) plan, which offered nineteen investment options, one of which was Enron stock. The 401(k) plan also provided that Enron would match employee contributions up to 3 percent of compensation. Enron\u27s match, however, was made in Enron stock. The plan placed restrictions on the Enron stock: employees could not sell that stock until the employee attained age 50. Not surprising for a plan so structured, employees\u27 401(k) accounts were heavily weighted toward Enron stock. Indeed, 62 percent of the plan\u27s value was, prior to Enron\u27s fall, invested in Enron stock. Moreover, some Enron officers encouraged Enron employees to invest 401(k) assets in Enron stock, even when they knew that Enron\u27s future was at serious risk because of business problems and accounting fraud. When Enron did implode, so did the retirement savings of many of its employees