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Tech Data suspends matches to 401(k)
By SCOTT BARANCIK, Times Staff Writer CLEARWATER -- Suffering from an industrywide sales drought, Tech Data Corp. is suspending company contributions to its employees' 401(k) plans. The change, confirmed Tuesday by chief executive Steve Raymund and effective this week, is expected to save the Clearwater company close to $3-million a year. It's also another sign of hard times in the computer hardware and software business. Tech Data is the world's second-largest distributor of such equipment. "Business all over continues to be very soft," he said. Some employees were grumbling about the suspension, which Raymund called temporary. Just weeks ago the company told employees it was freezing salaries. That meant no cost-of-living adjustments and no merit raises for the foreseeable future. "Some people obviously don't like to have benefits taken away. None of us does," he said. But he said the company continues to provide other benefits, including education and day care subsidies. The alternatives were harsher, Raymund said. Tech Data officials considered several options, including layoffs and across-the-board salary cuts. They chose the 401(k) approach because it would preserve jobs and would be shouldered largely by higher-wage employees. Under previous company rules, Tech Data contributed 50 cents worth of company stock for each $1 an employee put into a 401(k) fund, up to 3 percent of the employee's annual wages. For someone with a salary of $50,000, that meant a contribution of as much as $1,500. Tech Data's contributions totaled $2.7-million in 2000. "Our hope would be that the economy turns around and we're able to reinstate the match," Raymund said. Not all the news coming from Tech Data this week was bad for employees. Staff who received company stock years ago under a now-defunct Employee Stock Ownership Plan will soon be allowed to sell all of it, if they wish, not just the current limit of 50 percent. Raymund said the move was inspired by two events: the departure of several longtime employees who felt they had too much money tied up in company stock, and the fall of Enron Corp. Raymund also denied a rumor he was planning to retire soon. "It's obviously a tough time," he said. "But it's still quite interesting and stimulating. I love the people I work with and the business we're in." Tech Data's stock closed Tuesday at $46.10, down 19 cents. -- Scott Barancik can be reached at barancik@sptimes.com or (727) 893-8751.
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From the Times Business report Robert Trigaux
From the AP
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