- NextEra Energy's $5.4 billion retirement plan for employees has suffered about half a billion dollars in losses this year as outsized bets on company stock soured, reflecting ongoing risks of corporate 401 policies that encourage concentrated positions in company shares.
NextEra's strategy, ill advised by financial advisers and out of favor in most corporate 401 plans, generates tax deductions for corporate headquarters while workers shoulder all the risk of a concentrated position in a single stock. NextEra's reliance on its shares has paid off big for workers over the past ten years as the company grew rapidly, delivering a total return of 325%, compared to the S&P 500's return of 212%.
Enron’s $2.14 billion retirement plan had 62% of its assets invested in the company’s common and preferred stock at the end of 2000, months before it went bust. Employees took massive losses because they were prohibited from selling their shares amid disclosures of deepening financial problems, and then they lost their jobs.
But there are a number of large, noteworthy holdouts in the energy and utility sectors, SEC disclosures show.