Let us consider how a longtime employee or manager could find themselves with a concentrated position without realizing it:

ESPP purchases. The employee gets a 10% discount on buying shares, funded through a payroll deduction. They take advantage.
Company retirement plan. Some employees might be covered by a Defined Benefit Pension Plan set up by the company. One of their major investments might be stock in the parent company.
401(k) investments. One of the choices available within the company retirement plan is to choose to put money into shares of their employer's stock. They do it.
Performance bonuses. The employee receives an annual bonus for hitting their numbers. Some is paid in cash, another part is paid in company stock. Some of it might be tied up for a few years.
Stock options. Part of the employee's bonus might include options to purchase company stock at a specific price in the future. These options might be valid for a few years, but the company stock needs to move up in price to make exercising the stock options worthwhile. They don't own these shares yet, but have the option to buy them in the future.

All of this seems to make sense, assuming the company does well. Does anyone remember Enron? If loyal employees had a large amount of their retirement assets directly or indirectly connected to their company stock, their retirement will be jeopardized if the company stock plunges and does not recover. Many company retirement plans have held large amounts of their own company's stock. These examples from 2018 show percentages: Sherwin Williams (62%), Colgate Palmolive (56%) and McDonalds (39%).

Instant Insights /

Equity compensation: Can an employee own too much company stock?

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