Sighting: Dangers of Overinvesting in
Your Company

Enron was once the nation's seventh-largest company. How could it not be a safe investment for your 401(k), its employees reasoned. But in this account of its one-time officers' guilty verdicts, we see the costliness of such misplaced confidence. So how much company stock is too much? A general range that is useful is to limit your investing in any one stock (your company or otherwise) to 5%-15% of your total investable assets.

"Enron's collapse resulted in the loss of $60 billion in market value on Wall Street, almost $2.1 billion in pension plans and 5,600 jobs.

"Roy Rinard was up in the bucket of his service truck, working on a power line for Portland General Electric on Thursday morning when his wife, Vicki, called on his cellphone to say the verdicts were coming in an hour. The 57-year-old Rinard, who lost $470,000 in his 401(k) when Enron collapsed, quickly finished his work, got down and flipped on radio. News that former Enron CEOs Jeffrey Skilling and Kenneth Lay were guilty on nearly all counts left him ecstatic.

"Since 1980, Rinard has worked in Oregon for the Portland electric company which was purchased by Enron in 1997. Most of his retirement savings were in his company's 401(k) program at the time of the sale, when it converted to Enron stock. After Enron went bankrupt in 2001, he and his wife, Vicki, had to sell their home and buy a much smaller one.

"Tom Padgett, 63, was about to retire in 2001 when he was laid off from the Enron plant where he worked as a senior lab technician. He lost about $700,000 in retirement savings—and it took a year and a half for him to find another job.

"Gary Kemper, 62, who worked for an Enron company for more than 29 years, says he lost $280,000 in his 401(k). Many of the former employees are involved in shareholder lawsuits that seek some redress for their losses. But most don't expect to see much of their savings back.

"'I feel good about the verdict, but my retirement is still gone,' says Sherri Saunders, 58, who worked as an executive secretary for Enron for 24 years and lost about $1 million in retirement savings. Saunders now has a new job she loves, head secretary to a top executive at Methodist Hospital in Houston: 'We're rebuilding, slowly plodding along.'"
— USA Today, Barbara Hagenbaugh and the Associated Press

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