HOUSTON - Conoco Inc. has revamped the investment options menu for its $3.1 billion defined contribution thrift plan and hired J.P. Morgan/American Century Retirement Plan Services as its new semibundled provider.
Merrill Lynch was the plan's semibundled provider until the Oct. 8 conversion. Morgan/American Century, Kansas City, Mo., also replaced Merrill as administrator of Conoco's stock option and after-tax brokerage programs, said Floyd Wood, director of qualified benefits administration.
Administration of Conoco's $900 million defined benefit plan will remain in-house.
Conoco executives began considering revising the defined contribution plan when the Conoco plan split off from that of the company's former parent, E.I. du Pont de Nemours & Co., on Jan. 1, 1999.
Under the changes, Conoco will have 23 investment options grouped into core funds, asset allocation funds, specialized funds and company stock, Mr. Wood said. Some of the options are "custom" funds of funds. Previously, there were 32 options.
"We looked at the current funds and we made a decision that there was some overlap," Mr. Wood said. Callan Associates, San Francisco, was consultant on the project.
The lineup
The core funds are stable value, a custom account, Barclays Global Investors U.S. debt index, Barclays Global Investors equity index, a custom international equity portfolio and a custom small-company portfolio, Mr. Wood said. For the customized options, J.P. Morgan/American Century is creating funds of funds made up of other investment options in the plan.
The asset allocation funds are the American Century Strategic Allocation funds: conservative, moderate and aggressive.
The specialty funds are PIMCO Total Return Institutional; Fidelity Investments' Equity Income, Magellan and Low-Priced Stock; American Funds ICA; American Century Income & Growth, Equity Growth, Vista Institutional and International Growth; Janus Mercury; Goldman Sachs Capital Growth; Nations International Value; and Franklin Small-Mid Cap Growth.
Retained from the old plan are the three Fidelity funds: the stable value portfolio; Janus Mercury; and the Franklin fund.
The plan also will retain a DuPont common stock option, which is frozen, and a Conoco stock fund, formed last month by combining Conoco's Class A and Class B common stock.
The company match is made to the Conoco common stock fund.
Without the profit-sharing plan, the thrift plan has a 93% participation rate, Mr. Wood said. The company match is dollar for dollar for the first 6% of pay. There is also a profit-sharing contribution of between 1% and 6%, he said, adding that the corporate profit-sharing contribution for 2001 is 6%.
Before the changes were made, the thrift plan had seven Merrill Lynch funds and 17 mutual funds provided by AIM Advisors, Fidelity Investments, Franklin Templeton Distributors Inc. Defined Contribution Services, Hotchkis & Wiley, Janus and MFS Investment Management Inc. The plan also had three Merrill Lynch asset allocation portfolios, composed of other investment options in the plan.
Communications, education
J.P. Morgan/American Century also handled the communication and education programs connected with the conversion, including brochures, a 90-minute seminar and videotapes, said David Embry, vice president of J.P. Morgan/American Century.
The brochure features a cartoon character named Ruben who was customized to conform to Conoco's energy business; it is available on paper or on the Internet.
"We're doing a lot more communication to the folks than we'd done in the past," Mr. Wood said. "It went over very well."
J.P. Morgan/American Century is managing the stock-based compensation plans in conjunction with new alliance partner Mellon Investor Service. Mellon oversees the record keeping for the stock-based compensation plans.
