Web Article
September 2020

Employee Ownership by the Numbers

 

This page presents counts and characteristics of ESOPs and other employee ownership plans in the U.S., using data made available by the U.S. Department of Labor, the General Social Survey, and other sources.

Page Contents

How Many ESOPs Are There?

In 2018, the most recent year for which data is available, 279 new ESOPs were created, covering more than 37,000 participants.

In total, there are approximately 6,416 ESOPs in the United States, holding total assets of over $1.4 trillion. The number of unique companies with an ESOP is approximately 6,266 (a company may sponsor multiple plans).

How Many Workers Are in ESOPs?

ESOPs cover over 14 million participants, of whom 10.3 million are active participants—those currently employed and covered by an ESOP.

Table 1: Table of Plans, Participants, and Assets

  Plans Total participants Active participants Employer securities (millions) Total plan assets (millions)
Privately held companies 5,783 2,001,059 1,466,224 $137,727 $183,880
Small plans (under 100 participants) 3,363 145,766 109,967 $13,569 $16,093
Large plans (100+ participants) 2,420 1,855,293 1,356,257 $124,158 $167,787
Publicly traded companies 633 12,070,928 8,876,536 $133,711 $1,272,781
Total 6,416 14,071,987 10,342,760 $271,438 $1,456,662

(See notes on sources and methodology)

What Kinds of Companies Have ESOPs?

ESOPs are represented across a wide variety of industries, with a plurality of plans in services or manufacturing companies:

Figure 1: Industries of ESOP Sponsors

 

S vs. C Corporations

The slight majority of ESOPs are in C corporations:

Table 2: S Corporation vs. C Corporation ESOPs

  Plans Total participants Active participants Employer securities (millions) Total plan assets (millions)
S Corporations 3,522 1,008,198 712,790 $103,256 $118,836
C Corporations 2,894 13,063,789 9,629,970 $168,182 $1,337,825
Note: We classify an ESOP as an S Corporation if the plan's Form 5500 filing uses the pension benefit code 2Q, "The employer maintaining this ESOP is an S Corporation."

Where Are ESOPs Located?

The map below shows the number of privately held ESOPs and participants in each state. Hover over a state for details.

NCEO members can download PowerPoint slides containing more details about ESOPs in each state.

For a full nationwide list of all ESOPs containing detailed information on each plan, see our ESOP database.

How is the ESOP Universe Changing Over Time?

The below table shows the change in total ESOPs and total participants over time from 2014 to 2018.

Table 3: Count of ESOPs, Participants, and Plan Assets, 2014-2018

Filing Year Number of ESOPs Total participants Active participants
2014 6,717 14,050,344 10,563,219
2015 6,669 14,431,622 10,829,726
2016 6,624 14,206,950 10,611,905
2017 6,527 14,267,401 10,580,001
2018 6,416 14,071,987 10,342,760

New ESOP Creation

Since 2014, an average of 263 new ESOPs have been created each year. The below chart shows new ESOP creation since 2014. Nearly all new ESOPs are in privately held companies

Figure 2: New ESOP Creation, 2010-2016

 

Other Forms of Employee Ownership in the U.S.

There are over 4,000 qualified retirement plans that are "ESOP-like": profit sharing, stock bonus, or other defined contribution plans that are substantially (at least 20%) invested in employer stock, and have at least five participants. The number of ESOP-like plans has been steadily rising, as shown in Table 4:

Table 4: Change in ESOP-like Plans Since 2010

Filing year Number of ESOP-like plans
2010 1,676
2011 1,985
2012 2,231
2013 2,528
2014 2,898
2015 3,241
2016 3,773
2017 4,075
2018 4,468

Nearly all (98%) of ESOP-like plans identify their plans as profit-sharing.

Data from the General Social Survey (GSS) show that as of 2014, 19.5% of all employees working in the private sector reported owning stock or stock options in their companies, while 7.2% 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 32 million Americans own employer stock through ESOPs, options, stock purchase plans, and 401(k) plans.

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.

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 or similar equity awards in any particular year. 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.

The best data come from the quadrennial GSS, which has been asking respondents if they get stock options at work since 2002. The percentage of all private sector workers receiving options fell from 12.3% in 2002 to 7.2% in 2014, which translates into 8.5 million employees compared to 13.4 million in 2002. New shareholder approval rules, growing concern with dilution, and new accounting rules are the primary culprits. Unfortunately, the GSS data does not provide on how many people get restricted stock and similar equity grants, although we know that with changes in accounting rules for stock options in 2006, many companies shifted to these awards.

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 a 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, they 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.

Worker Cooperatives

Worker cooperatives are businesses owned and governed by their employees. Member employees govern the business, share its profits, and make decisions democratically on a one-member, one-vote basis. Worker cooperatives are less common than other forms of employee ownership. According to the Democracy Collaborative, as of 2017 there were 394 worker cooperatives in the U.S. with 6,734 employees.

Research on Employee Ownership and the Economy

An extensive research literature explores how employee ownership affects the economic fortunes of workers, companies, and communities. Read our summary here.

Sources and Methodology

These numbers are sourced from the NCEO's analysis of the Private Pension Plan (PPP) Research Files and of EFAST2 raw data files made available by the Department of Labor from data reported on the Form 5500. The PPP file is created each year by the Employee Benefits Security Administration's (EBSA) Office of Policy and Research (OPR) at the DOL and is used to generate and analyze aggregate statistics on the characteristics of the private pension plan universe. Direct Filing Entities (DFEs), welfare plans, one-participant plans, public retirement plans, and duplicate filings of other retirement plans are excluded from the Research File. NCEO methodology follows DOL standard practices with any exceptions noted.

The most recent PPP data file covers plan year 2016. The DOL has typically released PPP datasets with a roughly two-year time lag, but the 2017 and 2018 PPP files are still unreleased. As a result, we have used raw Form 5500 filing data for plan years 2017 and 2018 to generate approximate plan data for those years. This means that over-time comparisons pre/post 2017 should be viewed with caution, as the data was produced differently for those two periods. We hope to receive updated PPP datasets from the DOL and return to using DOL official figures.

Definitions of ESOPs are based on the plan characteristic codes filled in by the sponsor on line 8 of the form, or these codes were added as a result of the DOL's cleaning and editing of the data: 2O ("ESOP other than a leveraged ESOP") or 2P ("Leveraged ESOP—An ESOP that acquires employer securities with borrowed money or other debt-financing techniques"). Unlike the DOL, however, our count also includes plans without the 2O or 2P codes but with the code 2Q ("The employer maintaining this ESOP is an S corporation"). Approximately 46% of ESOPs are leveraged as of the most recently available data.

Large plans are defined as plans with 100 or more total participants and small plans as plans with fewer than 100 participants.

KSOPs are defined as ESOPs with a 401(k) plan feature. Stand-alone ESOPs have no such feature.

Active participants include any workers currently in employment covered by a plan and who are earning or retaining credited service under a plan.

Total asset amounts shown do not include the value of allocated insurance contracts of the type described in 29 CFR 2520, 104-44.

For questions about this or any of our research, contact NCEO Research Director Nancy Wiefek at nwiefek@nceo.org / 510-208-1312, or NCEO Research Associate Nathan Nicholson at nnicholson@nceo.org / 510-208-1313.

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