As Bear Stearns becomes the latest corporate giant to implode, a new group of employees must face retirement with far less savings than they anticipated. While the Bear Stearns debacle is reminiscent of Enron Corp.'s $2 billion pension disaster, it highlights a different potential employee investment drama. How will retirement savings held in Employee Stock Ownership Plans (ESOPs)–such as the one at Bear Stearns–fare if more companies disappear into the mortgage morass.

Bear Stearns workers own 30% of the financial services company; investments that were rendered pretty much worthless even as bidder JPMorgan Chase increased its takeover offer five-fold to $10. But they aren't the only ESOP participants concerned about their savings. Last year, 11.2 million Americans held $928 billion in employee-stock-ownership plans, stock bonus plans and profit-sharing plans that primarily invest in company stock, according to the National Center For Employee Ownership in Oakland, Calif.. That was up from 2006 when 10.5 million plan participants held $675 billion in similar plans.

Observers say it's too early to determine if the Bear Stearns debacle will force other companies to reconsider ESOPs as a retirement savings tool, or if employees will call for change, but there is a precedent. Following Black Monday and the 1987 stock market crash, many companies with ESOPs disappeared, and the sky didn't fall, notes Jack Van Der Hei, a Temple University business professor. “So that's not likely to happen this time either,” says Van Der Hei. But this calamity, and the Enron one before it (where plan sponsors invested too heavily in corporate stock), do underscore an important lesson : “Employees must diversify their retirement holdings. And companies must help them,” says Van Der Hei.

That's starting to happen. At Bear Stearns, for example, most employees already have other investments in defined benefit (DB) or defined contribution (DC) plans to supplement the ESOP funds over which they have no control. Moreover, among recently hired 401(k) participants in plans that offer company stock, only 42% had employers' shares in their accounts in 2007, down from 60% in 1998, according to the Employee Benefit Research Institution. Yet another positive sign is that only 23% of those companies that match employee 401(k) contributions still make up the difference in stock, almost half the 45% that followed that practice in 2001, according to Pam Hess, senior retirement consultant at Hewitt Associates. “The issue of how much is too much corporate stock to hold is always a critical concern,” says Hess. “And it's becoming even more critical.”

What can Bear Stearns employees do to try and win back some of their lost investment? One thing that they apparently cannot do, according to experts, is sue the financial services company for mishandling its fiduciary duties, since ESOPs exist to provide workers with stakes in their company. However, the employees can sue Bear Stearns for failing to disclose material adverse financial information that could affect the company's value. And they have. Already, at least two class action suits have been filed in U.S. District Court in New York. And you can be that other ESOPs will closely follow the outcomes to determine if they need to rethink their plans.