NextEra workers roll the dice with big bet on company stock

By Tim McLaughlin - 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,By Tim McLaughlin

Nearly 50% of the investments in NextEra’s employee-funded 401 retirement plan are in company stock, the highest among all 30 companies in the S&P 500 Utilities Sector. The total company stock balance across the index is $13 billion, or 14% of $90.4 billion in investments, according to a Reuters analysis of 2022 financial statements.

NextEra declined to comment on its use of company stock in employee 401 plans."We have nothing to offer," a company spokesperson said. Since the end of 2021, NextEra shares have slumped 27%, compared to a 11% decline on the S&P 500 Utilities Index, slashing the value of employees' NextEra shares by more than $500 million, according to the plan’s financial statements.

Kristin McKenna, president of Darrow Wealth Management in suburban Boston, said many times her new clients are unaware of the concentrated positions in their retirement accounts. Few companies disclose the impact of those tax deductions, but the ones that do say the impact is large enough to cut their 21% federal tax rate, according to filings with the U.S. Securities and Exchange Commission.

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NextEra workers roll the dice with big bet on company stockNextEra 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(k) policies that encourage concentrated positions in company shares. America’s largest renewable power company is among several U.S. energy and utility companies, including Exxon and Southern Company, that continue to promote big, concentrated bets on company stock in worker retirement plans. A Reuters analysis of retirement policies and stock performance data, along with interviews with retirement and finance experts, show a small but prominent corner of Corporate America still plays a risky game with company stock in employee benefit plans even after high-profile corporate implosions like the $63 billion Enron collapse.
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