That is because the brokerage firm has decided to suspend its $2 for every $1 contributed by participants match in the company’s 401(k) plan. The move is the latest in a series of cost-cutting measures the San Francisco-based company has taken as it copes with the current economic drought, according to a New York Times report.
However, Schwab spokesperson Morrison Shafroth told the San Jose Mercury News that the decision is “not a permanent decision” and the company’s matching program would be reassessed in 2004.
The suspended match was fairly generous, offering employees the $2 for $1 deal up to $250 a year, followed by a dollar-for-dollar match up to 5% of the employee’s annual compensation. Schwab’s chief financial officer, Christopher Dodds, told the Times the company turned to the contribution cut to save a “reasonably significant” amount, just under $15 million a quarter.
Dodds said the company found itself making tough choices about how to reduce expenses because customers were making 20% fewer revenue generating stock trades. The loss of the 401(k) match was part of an overall cost-reduction package that included travel and marketing budgets. In the end, the company decided to spare employees any more pink slips after already eliminating 9,000 jobs since the end of 2000, a workforce reduction of 35%.
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