Not that long ago, there was a post on here suggesting that we may see a reduction in the 401(k) match from 8% to 5% starting in early 2021. Any updates or validation of this? Any other suggestions of reductions to benefits? Salary freezes?
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Thanks for displaying your talent for cutting and pasting internet drivel, last poster. We are all green with envy,
The Dow is meant to represent the American economy, with a balanced portfolio of different industries. Energy remains a major part of the economy, of course, but it makes up a declining portion of the stock market. As recently as 2008, energy stocks were 15% of the S&P 500. After a decade of underperformance, they make up just 2.5%.
Once the largest company in the world, Exxon had a market cap of over $500 billion as recently as 2008. But it is now around $175 billion. Chevron has a smaller cap at $162 billion.
Exxon has underperformed Chevron this year, in part because investors are worried about its ability to maintain its dividend while keeping its debt load in check going forward. The company has that said the dividend is a priority and that it does not intend to take on new debt.
In response to a question from Barron’s, Exxon said that the Dow decision won’t affect its business, which remains strong.
The company’s relative strength versus Chevron today may not have had much to do with the decision, one analyst said. Given the Dow’s peculiar rules, the more important factor may have been the share price, notes Raymond James analyst Pavel Molchanov. The Dow is weighted by price, not market cap, so higher-priced stocks have a bigger impact on the index. Chevron trades at $86.
“Because the DJIA incorporates share price in its weightings, in part the decision to ‘demote’ Exxon but ‘spare’ Chevron can be attributed to the fact that Chevron’s share price is twice as high,” Molchanov wrote.
Molchanov, however, suspected there was more to the decision.
“Fundamentally, Chevron is positioned much more straightforwardly as an oil producer: a high degree of operating leverage to commodity prices, and by contrast limited exposure to refining and almost none to chemicals,” he wrote. “In this sense, Exxon’s vertical integration may have helped seal its fate vis-à-vis the DJIA. The index committee probably wanted to maintain some oil exposure, making Chevron the better choice to do so, especially given that chemical giant Dow Inc. (not to be confused with DJIA itself!) already represents the chemical industry in the index.”
@27fmp, Exxon was delisted from the DOW30 because Chevron was also a DOW component and was unbalancing the 30 stocks in the index. One of these oil stocks had to go. Exxon was eliminated, but not likely for dropping its employee 401k match, as a move like that has a tendency to strengthen the value of a stock, not weaken it. Dropping or lowering the 401k matching is a detriment to the employee, not outside investors. I think the DOW is a rigged index, only looking to jettison longterm components that are going through a temporary rough time and replacing them with stocks that are on the rise. All this to maintain new DOW Index records. Not bad if you are invested in a DOW30 ETF or mutual fund that tracks its holdings. But that’s the only reason Exxon was taken out of the DOW index after so many decades. Pure market speculation is all.
XOM was delisted from the Dow not long after it ended its 401k match. Certainly not the only reason but I do think it made XOM look like a desperate company who was no longer the industry leader.
Yes, starting in Q3, match will be 5% for employees with 15 years or more service, and 3% for all others. Idea is to reward one’s time with Chevron.
Chevron tries very hard to be just below total median pay and benefits package. When competitors cut wages and benefits, Chevron needs to follow quickly. Stay tuned.
Chevron has been a follower of other peers for n matters of employment benefits rather than being a leader. We all know Exxon recently cutback on their 401k matching program and lowered their stock dividend program too. So, it’s only evident Chevron will probably have reason to do the same. Just as soon as CEO Wirth grows a spine, he’ll finally come out and make the announcement. Right now, despite the slow uptick in oil prices, I’m sure right now, the Chevron brass is mulling over just how and when to throw cold water on its employees and sell the overdue dividend cut to the stockholders and investors. If you hold CVX, start thinking of unloading some or all your position.
Do the Chevron employees normally hang out and discuss company related issues on a layoffs board? Seems rather strange, and quite telling.
I am surprised this was not done in 2019 or earlier. You can get a heads up by keeping up with SEC filings. This might warrant a notice to the SEC.
Very likely adjustments will be made in some form. Health benefits for 2021 is available for review now. 401k match has a good chance of being lowered a small amount. Pension could be looked at for restructure. Bonus, CIP will likely be lower than historical averages. Salary action could be minimal comparatively as well. We all need to expect some form of cost control and tightening of the belt. Its a very tough time to be in the petroleum industry and companies must employ savings strategies. There will not be a dividend cut any time soon.
Not going to happen. Shareholder value is paramount.
Not gonna happen! We will cut enough folk to carry on!
Do you think Chevron will advertise this fact now, while still steamrolling employees? No, they will stay quite until sometime near the end of 1Q 2021. Then as soon as you’re comfortable and happy to have been retained with the company, they’ll spring the final benefit changes on all of you. The show is not over until the fat lady sings.
First thing to go at XOM, next thing on the chopping block
@mvv, Your comments are 100% correct but you are also describing each and every 401k on this planet. It has absolutely nothing to do with Chevron. A few 401k plans are better than others but you are always subject (Captive) to their mutual funds only and can't fix it until you leave. HSA's are often worse. This is not new at all and most attentive investors know this. That is why most people with experience advise you to roll it into a rollover IRA when you leave. The tax status stays the same. I have one with Fidelity. I can buy SPY all day long if I wanted to, but Whooop-de-friggin-do! Who the heck cares. I honestly wish I was one of those people who don't care and don't worry about that extra 1 or 2% and leave everything in their company 401k and sleep like a baby - lol!
FACT:
SPY Etf has a very low fee, just 0.095% annually. That means if you invest $25,000, you'll pay just $23.75 a year. Compare that to the $137.50 you'd pay a year if you owned the typical stock mutual fund that charges 0.55% annually. add ore if its closer to 1% like some are paying here
Fund Managers hate people like us knowing this simply fact!
if you have 500K in mutual funds you are paying them over (20 times 137.50) => 2615 per year just to park money there. And it gets worse : most managed funds can't even match the SPY, they have to do better than it just to counteract the fees (nit a given) , most don't, then you get screwed even more because the fees you pay to them are reducing the amount you compound each year. It adds up to 10'000's over lifetime investing.
If I had my way Id only agree to these outrageous fees ONLY if they can beat the SP500 and guess what they will never agree to THAT. why not? Because they would actually have to do some work and be remunerated based on actual performance. Why oh why oh why isn't the SPY available to be used in the ESIP? I called one of them and they didn't even know what the SPY is! can you actually believe THAT!!! Ad they fobbed me off by saying the SPY is too speculative, Huh! That shows you just how ignorant the benefits folks at Chevron are . They said "talk to Fidelity", you know what Fidelity said "Talk to Chevron" . Yes there is fund in fidelity that is similar to the SPY , but is charges more fees than SPY. So I gave up, Guess what I'm removing my money from Fidelity ASAP so I can invest it the way I want to. THE ESIP is joke , the only reason I put money in it is to get Chevron's match and get the tax advantages
It wouldn't suprise me if it did happen but who knows. At some point the dividend needs to be looked at instead of sacrificing employees all the time. I'm a shareholder as well and I would be ok with taking a smaller dividend to save employees in any company I hold shares in.
Pure speculation trolling
That was pure speculation based on what some other companies are rumored to be doing. Anything is possible, but nothing like that has been announced.
I don’t know anything about that, but I looked at next years medical plan and saw that the out of pocket maximum increased 50%. I wouldn’t be surprised if there is a benefit reduction in tandem with more layoffs. Gotta pay that dividend, you know?