Aligning employee interests and providing corporate tax benefits, but at what cost?
Defined contribution (DC) plan participants have been advised for decades on the benefits of diversification, but many still hold large portions of company stock. Company stock can be a retention incentive and align employee interests with those of the corporation. The corporate tax benefit of offering company stock is also potentially attractive. Despite these benefits, offering company stock can open the plan to lawsuits if the program is not carefully monitored and administered. As a plan sponsor, you may have wondered what actions are needed to protect the plan, and more importantly, the participants.
This Russell Investments Viewpoint examines several issues regarding company stock ownership, recent litigation, and steps that some fiduciaries are taking.