A Statistical Profile of Employee Ownership
Updated March 2015
Estimated Number of ESOP Plans, Number of Participants, and Plan Asset Value (2012 data)*
|Category||Number of Plans||Participants||Employer Securities||Total Assets|
|Large public ESOP plans (plans with over $3.1 billion in assets)||79||7.63 million||$102 billion||$654.6 billion|
|All other large ESOPs (plans with over 100 employees)||2,835||6.0 million||$119.5 billion||$392.0 billion|
|Small ESOPs (plans with 100 or fewer employees)||3,994||162,000||$9.95 billion||$12.3 billion|
|Total for all ESOPs||6,941||13.5 million||$214.4 billion||$942.5 billion|
|ESOP-like plans (mostly profit sharing plans with 20% or more of their assets in company stock)||2,232||1.1 million||$18.1 billion||$49.9 billion|
|Total for ESOP and ESOP-like plans||9,140||14.9 million||$250 billion||$1.1 trillion|
Data on Broad-Based Employee Ownership in the U.S.The NCEO estimates that approximately 28 million Americans own employer stock through employee stock ownership plans (ESOPs), options, stock purchase plans, and 401(k) plans. The estimate is based a variety of company surveys and, where available, government data. Another way to look at the data was provided by several questions included in the General Social Survey (GSS), a 2010 random sampling of working adults performed by the National Opinion Research Center (NORC) of the University of Chicago. Joseph Blasi and Douglas Kruse of Rutgers and Richard Freeman of Harvard, all affiliated with the Shared Capitalism Project of the National Bureau of Economic Research, organized the questions and their analysis. The NCEO was one of the sponsors of the survey questions, along with the Shared Capitalism Project, the Beyster Institute, the Plan Sponsor Council of America, and the Employee Ownership Foundation. The Shared Capitalism Project receives support from the Rockefeller and the Russell Sage Foundations.
The GSS data are reported in detail in a separate page on this site. In sum, however, they showed that as of 2010, 17.4% of all employees working in the private sector reported owning stock or stock options in their companies, while 8.7% specifically held stock options. Looked at another way, 36% of employees working for companies with stock (this excludes government employers, nonprofits, partnerships, etc.) owned stock or options in their companies. This means that approximately 28 million Americans own employer stock through ESOPs, options, stock purchase plans, and 401(k) plans.
Because of the differing estimating techniques and inevitable ambiguities of data collection and interpretation in this area, however, variations in results are to be expected. These numbers, as well as any other estimates, should always be understood with the caveat that they cannot be precise. In what follows, we focus on ESOPs and ESOP-like plans, equity grants (primarily stock options and restricted stock), and employee stock purchase plans (ESPPs). While about 8% of 401(k) assets are in company stock, these plans serve a very different purpose than other kinds of employee ownership plans and so are excluded from this analysis.
Note that some companies offer multiple employee ownership plans, and many employees participate in more than one plan. For example, many ESPP participants also own stock in a 401(k) plan, get stock options, or have other equity compensation plans. Hence, the total number of participants in all employee ownership plans cannot just be added up to get the total number of employee owners.
To count literal ESOPs, we include all sponsors with plan type codes 2O (ESOPs other than leveraged ESOPs), 2P (leveraged ESOPs), and 2Q (S corporation ESOPs). Total asset amounts shown exclude funds held by life insurance companies under allocated group insurance contracts for payment of retirement benefits. These excluded funds make up roughly 10%-15% of total pension fund assets. Large public company plans are defined as ESOP plans with more than 3.1 billion in total assets and not privately held. This definition is based on the US Department of Labor (DOL) definition of "mega plans," adjusted for inflation. ESOP-like plans are here defined as profit sharing, stock bonus, and other defined contribution plans that are substantially (at least 20%) invested in employer stock, and have at least five participants.
Trends and Patterns in ESOPs and ESOP-Like PlansESOPs are stock bonus plans qualified to borrow money from or on the sponsoring company's credit; otherwise, ESOPs and stock bonus plans are very similar. Estimating the number of ESOP companies, participants, and the assets they hold is limited by the availability and quality of data collected by the US Department of Labor through Form 5500.
The NCEO has revised its estimates for the number of ESOPs, using a consistent and conservative method across each plan filing year from 1999 on (earlier estimates use a different combination of methods). You may have seen somewhat different numbers in prior years, but we believe this new technique is both more conservative and more accurate. Estimates for prior years may change as more complete data for prior filing years is released by the DOL, although the DOL believes that its data files from 2008 and earlier are now in their final form. The current method begins with all available 5500 records. The NCEO cleaned the data in as many ways as possible by searching for missing data, removing companies that appear to have inactive ESOPs, and removing records with obvious errors. We erred on the side of making the most conservative estimates we were comfortable with, especially with regard to the number of plans.
The table below shows that while the number of plans identified as ESOPs has decreased, the number of active participants has steadily increased. While 1,933 fewer individual ESOP plans filed in 2011 compared to 2002, the total number of participants increased from 10.2 to 13.5 million over the same period. Currently employed workers covered by an ESOP (active participants) increased from 7.9 million to 10.3 million.
While the number of net plans (new plans minus terminations) declined in the early 2000s, that was largely the result of a large number of very small and very dubious plans that were set up (and usually not even funded) to try to take advantage of recent S corporation ESOP tax law. Congress, the IRS, and the ESOP community all acted to prevent these plans from operating and almost all were then terminated. Meanwhile, existing ESOPs were growing faster than the economy, meaning that participant and asset numbers increased. For details on what happened, read Why Has the Total Number of ESOPs Gone Down But Participation and Assets Gone Up?
ESOPs were given statutory authority in 1974. We have not included the data from years before 2002, however, because we believe the reporting systems and data reliability prior to that are insufficient. In 1975, however, we believe there were about 250,000 participants in about 1,500 ESOPs. Estimates between then and 2002 are not reliable.
For a more detailed description of the methodology used here, see the article NCEO Methodology for Counting ESOPs. For our complete report on this subject, see our issue brief The Changing World of Employee Ownership.
Trends in ESOP Numbers and Participation
|Year||Number of ESOPs||Total participants||Active participants*|
Age of ESOP Plans
|Plan Effective Year||Number of Plans||% of Plans||Total Number of Plan Participants|
Trends in ESOP-Like Numbers and Participation
|% Filing year||50 participants or fewer||More than 50 participants||All ESOP-like plans|
Broad-Based Equity Grants"Broad-based equity grants" are those that grant stock options to 50% or more of full-time employees. Unlike the case with ESOPs, it is not realistic to chart the growth of stock options year-by-year because there are no hard data compiled on a comparable basis year-by-year. We can look back at 1990 and estimate roughly 1 million option holders and look at the present day and estimate roughly 9 million option holders, but it is impossible to accurately say how many employees held options in 1994, 1995, 1996, 1997, etc. Why? ESOPs are highly regulated retirement plans, and companies with ESOPs must tell the government every year how many employees are in the plan. The government regularly publishes summaries of these data. Although it is imperfect, it gives us something to go on. For stock options, on the other hand, nothing of the sort is available.
Our current estimate draws on surveys from the National Association of Stock Plan Professionals, the Bureau of Labor Statistics, and the General Social Survey. Each of these data sources has limitations, but we believe the 9 million number is accurate within a margin of error of about 1.5 million either way.
Employee Stock Purchase Plans (ESPPs)Employee stock purchase plans (ESPPs) include both tax-qualified "423 plans," which about 2,500 companies offer, and nonqualified plans, which about 1,500 companies offer. Data are based primarily on the National Association for Stock Plan Professionals' Stock Plan Design and Administration Survey (1998 and every two years thereafter), especially the more recent surveys, and the 2012 paper "Do non-executive employees have information? Evidence from employee stock purchase plans," by Ilona Babenko and Rik Sen. To estimate the number of employees covered under the plans, we took the total number of companies offering plans, multiplied those numbers by the average number of employees in the companies, and multiplied that number by the average percentage of participation in the plans. Almost all companies with ESPPs are public. Babenko and Sen found that in companies with ESPPs between 1998 and 2007, the mean annual contribution of participating employees was $1,630 per year.
Employee Ownership and Corporate PerformanceThis issue is described in detail in our article Research on Employee Ownership, Corporate Performance, and Employee Compensation. Generally, the results show that ESOPs make a significant contribution to corporate performance, particularly when combined with management styles that stress employee involvement in decision-making at the job level and sharing financial information with employees. Data for broad-based stock options also paint a positive picture, although the results are somewhat more ambiguous.
Basic Characteristics of ESOPs
|% of ESOPs that are in S corporations||40-45%|
|% of ESOPs that are 100% ESOP-owned||30-40%|
|% of private companies more than minimum required voting rights||17%|
|Mean allocation to accounts, as a % of payroll (private companies)||5-8%|
|Mean allocation to accounts, as a % of payroll (public companies)||3-4%|
|Median number of employees, private companies||125|
|Mean number of employees, private companies||1,500|
|Median number of employees, public companies||2,100|
|Mean number of participants, public companies||14,000|
|Percentage of ESOPs that are in public companies||3%|