Innovative Plan for Encouraging Employee Ownership

In the U.S., it's common for companies to provide employee ownership as a benefit. Outside the U.S., executives in most countries strongly dislike that idea. They want employees to buy stock. But how can employees do that if they have limited discretionary income? Dexia, a Belgian multinational financial holding company, has solved the problem by creating a plan in which employees who buy one share can borrow money to buy nine more. At the end of five years, if the stock price has declined, they get their money back. If it goes up, the lender gets some of the shares (enough to cover a pre-agreed rate of return), while the employee gets the one share plus however many additional shares remain. The result has been 80% participation in Belgium and France, Dexia's main locations, and 60% elsewhere, very strong numbers for stock purchase plans (quite a but higher than conventional discounted plans, for instance, even those with option features). Dexia now has set up a consulting division to sell the plan to other companies.