P & G employees lose out most in stock plunge

[/ dave /]

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BOSTON (CBS.MW) -- On Tuesday, March 7, Procter & Gamble's CEO announced
that third-quarter and fiscal year earnings would fall considerably short of
expectations. The news set off a brutal wholesale dumping of the company's
shares, driving the stock price down by more than 30 percent. In one day, the
volume of shares changing hands was 13 times the average, and over $35 billion
in P&G market value evaporated. 

There are lingering questions as to why the market
reacted so viciously towards the Cincinnati-based maker
of venerated brands such as household products Tide
laundry detergent and Crest toothpaste. 

But one thing is certain: Procter & Gamble retirement
plan participants were taken to the cleaners. According to Hewitt Associates,
more than 95 percent of P&G's profit sharing and defined contribution retirement
plan assets were invested in Procter & Gamble stock (PG: news, msgs). 

That’s a hard pill to swallow for plan participants. Some say we shouldn't be too
sympathetic, because P&G employees have enjoyed solid gains in the
company's stock for several years. Also, employees chose to invest their savings
in their company’s stock, right?

Not exactly. Many employer plans use their stock to fund retirement plan
obligations such as profit sharing and 401(k) plan matching contributions. Not
only do some companies make contributions in the form of company stock, they
also restrict employees from selling shares until they are age 55 with over 10
years of service. 

(...) 

http://cbs.marketwatch.com/archive/20000315/news/current/martin.htx?dist=nwtpm

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/  dave  /