Second Annual Stout ESOP Index Shows Large ESOP Companies Continue to Outperform the Market
In the only study of its kind, the Stout ESOP Index, the global advisory firm Stout found that between 2021 and 2025, the average annual share price growth in its index of private ESOP companies substantially outperformed the S&P 500 index and the broader Russell 2000 index. The study was originally released in late 2025, covering 2021 through 2024, and has now been released in its second annual version, covering 2021 through 2025.
The Stout index is composed of just over 350 of Stout's clients that had an ESOP for more than one year during the time period. Stout weights and rebalances its index annually in the same manner that the S&P 500 and Russell 2000 are weighted. (Weighting means that the value of the shares for each company is multiplied by the number of shares. That number is summed across all companies and divided by the total number of shares. This methodology means companies with more total share value count more in the index.)
The Russell 2000 index is more similar to the ESOP companies than the S&P 500 because few ESOP companies would be large enough to be in the S&P 500. The S&P 500 also can be heavily influenced by a small number of companies, as was the case in recent years with the so-called “Magnificent Seven” companies that generated most of the growth in the index over the study period, with other companies in the index performing much less well overall.
Other research has shown that being ESOP-owned contributes to sales and employment growth, but this is the first study to compare share price growth in an index of private ESOP companies to the public markets. Stock price data for private ESOP companies is not publicly available.
The table below compares Stout's latest ESOP index to the Russell 2000 and the S&P 500.
| ESOP Index Versus Market Returns 2021–2025 | ||
|---|---|---|
| Company Type | 5-year return | 3-year return |
| All ESOP companies in index | 18.0% | 18.6% |
| ESOP index companies under $100 million in enterprise value | 12.6% | 13.2% |
| ESOP index companies $100–$500 million in enterprise value | 17.1% | 14.0% |
| ESOP index companies over $500 million in enterprise value | 17.6% | 18.9% |
| S&P 500 | 12.8% | 21.3% |
| Russell 2000 | 4.7% | 12.1% |
The ESOP companies with over $500 million of enterprise value constituted 12% of the index, those between $100 and $500 million 38%, and those under $100 million 50%. There are no available data on how this compares to ESOP companies overall because the Department of Labor's Form 5500, which serves as a central source of data on ESOPs, covers only participant size in this regard. But the Stout index probably somewhat overrepresents large firms.
Government contractors underperformed the market, largely due to funding cuts, while architecture, engineering, construction, and industrials all outperformed the market. More mature companies did better than newer ESOP companies.
The Stout index represents about 6% of all ESOP companies. The representativeness of this group of companies was not assessed in the report, although the firms are probably larger than the typical ESOP. Stout has said that the report will be updated annually.