December 1, 2022

Employee Ownership Trusts in the News

Executive Director

The November 30 article Through ‘ownership trusts,’ investors can help employees become owners and owners retire on Impact Alpha's website focused on the employee ownership trust (EOT) as a new model of employee ownership in the U.S. Although EOTs are the primary form of employee ownership in the UK, they are relatively new in the U.S.

Mark Hand, a researcher at Southern Methodist University, identified 32 US companies with EOTs or similar ownership structures. EOTs may be a simpler path to employee ownership, allowing the possibility for companies with as few as four employees, although they are also viable for large companies: the UK's flagship EOT company, the John Lewis Partnership, has 80,000 employees (see this video), and Patagonia recently announced it was using a related structure, a perpetual purpose trust.

EOTs involve creating a purpose trust (although it may have different names in different states), which will own the shares of the company on behalf of employees, who typically receive an ongoing share of profits rather than receiving the value of shares at retirement. See an Introduction to Employee Ownership Trusts for a general overview, case studies, webinars, technical resources, or our table comparing EOTs, ESOPs, cooperatives, and equity grants.