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The State of Broad-Based Employee Ownership Plans 2013

An NCEO Issue Brief

(Print Version)

by Corey Rosen

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This report details the extent and growth of employee ownership through ESOPs, 401(k) plans, stock options, ESPPs, and other vehicles; summarizes the leading research on employee ownership and corporate performance; and discusses current challenges and prospects. The 2013 edition updates the information and, drawing upon new survey data, adds new sections on corporate governance, ESOP company executive compensation, shared capitalism in Great Place to Work applicants, equity trends in private companies, stock options and corporate outcomes at Great Place to Work applicants, the effect of plan participation on unemployment, and international developments in broad-based plans.

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Publication Details

Format: Perfect-bound book, 38 pages
Publication date: January 2013
Status: In stock



Growth of ESOPs and Equivalent Plans
The 2012 NCEO ESOP Corporate Governance Survey
ESOPs and Executive Compensation
The Effect of ESOPs on Corporate Performance
The 2012 Shared Capitalism Study of Great Place to Work Applicants
Employee Ownership and Employee Financial Well-Being

PART 2: Broad-Based Equity Plans
The Development of Broad-Based Equity Plans
Recent and Current Trends in Stock Plan Design and Participation in Public Companies
Private Company Equity Trends
Corporate Performance Data: Does It Matter Who Gets Equity?
Stock Options and Corporate Outcomes in Great Place to Work Applicants

PART 3: General Issues
The Impact of Participation in ESOPs or Other Broad-Based Equity Plans on Unemployment
Legislative and Regulatory Issues for Employee Ownership Plans
International Developments in Broad-Based Plans


From "The Effect of ESOPs on Corporate Performance"

Kruse and Blasi obtained files from Dun & Bradstreet on companies that had adopted ESOPs between 1988 and 1994. They matched these companies to non-ESOP companies that were comparable in size, industry, and region. Then they looked for which of these companies had sales and employment data available for a period three years before the plan's start and three years after. The sales and employment growth data were then compared for each year for each paired company. They also checked the companies' filings with the Department of Labor to determine which of the companies had other retirement-oriented benefit plans. Finally, they looked to see what percentage of the companies remained in business from 1995 through 1997.

The process yielded 343 ESOP companies and 343 pairs for the overall sample. However, missing data meant that employment data were available for only 254 ESOP companies and 234 pairs, sales data for 138 ESOP companies and 77 pairs, and sales/employee data for 115 ESOP companies and 65 pairs (some non-ESOP companies could be paired with more than one ESOP company).

The results showed that ESOP companies perform better in the post-ESOP period than their pre-ESOP performance would have predicted. Table 13 shows the difference in the pre-ESOP to post-ESOP period for ESOP companies' sales growth, employment growth, and growth in sales per employee.

From "Private Company Equity Trends"

Choosing the right form or forms of equity awards is integral to designing a plan that achieves the company's goals. Of the companies that responded to the survey, 55% chose to have one form of equity awards, 29% use two, and the remaining 16% use three or more.

Stock options remain the most popular type of equity award, with 73% of participating companies granting them to at least one group of employees. The use of stock options varied greatly by company size and industry. For example:
  • Forty-two percent of companies with 1 to 10 employees grant stock options, versus 89% of companies with 101 to 500 employees.
  • Sixty percent of wholesale/retail companies grant options, versus 92% of software companies.
  • Other forms of awards were far less common. The second most popular form of equity is restricted stock, with 23% of companies using this type of award. The use of other forms of equity also varied greatly by industry.
  • Sixteen percent of software companies use restricted stock, versus 36% of manufacturing and wholesale/retail companies.
  • Eight percent of biotechnology companies use performance shares/units, versus 47% of manufacturing companies.