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Comments

phwest

There are a number of reasons why companies match with company stock. First, the tax code does give some cost advantages to this. Secondly, for a company that has been doing this for a while, this has some useful "anti-takeover" characteristics. It puts what can be a decent percentage (3-5%) of stock into a bucket that basically can't be acquired by a third party. It may not sound like much, but for firms where management already has a significant stake and perhaps a founder, or founder's foundation as well, 5% of the stock may take the effectively traded stock down below 50%, or into the 50-60% range where a hostile acquistion is almost impossible.

Finally, having employees invested in company stock does give some sense of "ownership" to employees (senior management pretty much has to own stock), and serves to keep employees interested in the outlook for the company. This is obviously directed more at traditional long-service employees who have built up substantial stakes.

Note that these are all reasons that are valuable to the company, not the individual, who obviously has plenty of reason not to be over-invested in his employer. But then it's the company that contributes the match.

SaraJane

get use to my lack of spelliing skills. I'm a numbers girl.

Thanks again!

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