Boyd gaming to cut 401(k) matches

LAS VEGAS, Nevada -- A second local casino company is cutting into its employees' retirement funds to battle the slowdown in customer spending.

Boyd Gaming Corp. will cut its employees' 401(k) matching program by half beginning Jan. 1, according to a letter sent to workers this week.

The announcement comes less than two weeks after Station Casinos told its employees it was suspending its matching plan completely.

The Boyd Gaming will drop its matching payments of 50 cents for every dollar contributed up to 6 percent of an employees' pay to 25 cents for every dollar up to 6 percent.

As an example, for an employee who makes $40,000 per year, the company match would drop from $1,200 to $600 per year.

Boyd Gaming spokesman Rob Stillwell said company policy is to not comment on employee benefits or personnel matter.

The move affects all of Boyd Gaming's nonunion hourly and salaried employees.

Boyd Gaming and Station Casinos are part of a larger national trend of employers cutting or suspending 401(k) matches because of the worsening recession.

David Wray, president of the nonprofit employer lobbying group Profit Sharing/401k Council of America, said employers who cut matches during the economic slowdown in 2001 and 2002 reinstated the benefit when consumers began spending again.

"We anticipate the same kind of behavior this time," Wray said. "I don't think you're going to see some significant change in behavior over the past."

The letter announcing the decision, signed by Bob Berglund, Boyd Gaming vice president of employee benefits and insurance, did not say if the decision was temporary and would be re-evaluated in the future.

Station Casinos said in its letter to employees dated Nov. 24 that its decision will be re-evaluated "on a periodic basis."

Wray said decisions to cut into employees' retirement plans are not done casually, but done to preserve jobs.

"It's fortunate (companies) have this opportunity to reduce their employer contribution rather than lay people off, which is typically what's going on," Wray said. "When people suspend their matches, the calculus is usually, how many people will that keep on the payroll?"

Boyd contributed $8.6 million to the matching plan in 2007, $11.7 million in 2006 and $10.5 million in 2005, according to the company's year-end earnings report filed with the Securities and Exchange Commission in February.

Boyd, which has remained quiet on the topic of job cuts and hour reductions at its properties, has seen its revenues decline 10.5 percent while posting a net loss of $2.2 million through Sept. 30.

The company, however, carries a manageable debt load of $2.6 billion and does not appear to be in danger of tripping any debt covenants.

The suspension of construction on the $4.8 billion Echelon project earlier this year also freed up money on the company's balance sheet.

Boyd Gaming closed at $4.28 per share on the New York Stock Exchange on Wednesday, down 4 cents, or 0.93 percent.