Newspaper article The Christian Science Monitor

After Enron, Calls Grow for Pension-Law Fixes

Newspaper article The Christian Science Monitor

After Enron, Calls Grow for Pension-Law Fixes

Article excerpt

When Polaroid Corp. declared bankruptcy in October, workers didn't take it on the chin only in the form of layoffs.

Many also had retirement nest eggs lined with stock in the instant-photography firm. One of them was Betty Moss.

Laid off last July after 35 years with the company, she lost $200,000 in retirement funds as her stock in the photography firm imploded - and she now feels devastated.

It's a plight now common to thousands of workers at other American companies - many of them long-time pillars like Polaroid - whose stock has plunged and brought worker 401(k)s down with them.

The highest-profile recent case is Enron, the energy company that declared bankruptcy earlier this month. But retirement accounts have been ravaged at other firms, including telecommunications giant Lucent Technologies, that have floundered but not gone bankrupt.

The financial mess has prompted an uproar in Washington and the financial community over practices at many companies that encourage workers to invest in their employers' stock.

While the plans are arguably well-intentioned, critics say they violate a key rule of responsible investing: Diversify.

In both the House and the Senate, Democratic legislators are pushing for a law barring workers from investing more than 10 percent of retirement contributions in their employers' stock.

Last week, the House Capital Markets and Oversight Subcommittees held a joint hearing on the Enron case, concerned about the disappearance of $63 billion in stock wealth and the huge losses of 12,000 workers in a 401(k) plan, the majority of was Enron stock as of a year ago.

Particularly troubling many employees is the fact that while nest eggs are clobbered, their bosses are often walking away from corporate failures with millions in wages and stock options they cashed out.

Mrs. Moss, who was a senior manager at a Polaroid operation in Atlanta, wrote the bankruptcy judge to express her "heartfelt objection to [company chairman] Gary DeCamillo's request for millions of dollars to give retention bonuses to 45 'key executives.' These are the same people who have already become wealthy while riding Polaroid Corporation into the ground. …

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