New European Research on Broad-Based Employee Ownership

Broad-based employee ownership is still in its infancy in most European countries, but there is growing interest in the idea. Two new papers from a recent seminar led by Erik Poutsma of the Nijmegen School of Management in The Netherlands highlight the developments.

In "Changing Patterns of Financial Participation in Europe," Poutsma and his colleagues report on a survey of profit sharing and ownership plans in six countries (the United Kingdom, Denmark, France, The Netherlands, Finland, and Spain). The survey found that broad-based option plans were used at 28% of the companies in The Netherlands, 18% in the UK, and 4% to 12% of companies in other countries. Share purchase plans were more common, with 91% of UK companies offering the plans, 51% of French companies, 40% of Danish companies, and 12% to 16% in the others. The median ownership in the share plans, however, was only 1% of total shares. Only a small minority of companies plan to change either their broad-based option or stock purchase plans in right of recent accounting changes.

In a paper reporting on the results of an October 14, 2005, seminar on the topic, researchers report on a survey of 209 public companies in the UK, France, Finland, and Germany, finding that 37% had some kind of broad-based share plan. A study on French employee ownership plans found that there was a limited impact on financial performance, primarily in smaller companies.