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The Employee Ownership Update

Loren Rodgers

September 1, 2011

(Loren Rodgers)

Employee Ownership and the Development of Human Capital

An article in the current issue of Economic and Industrial Democracy (vol. 32, no. 3) draws on data from the British Workplace Employment Relations Survey to examine whether employee ownership companies invest more in skills training for their employees. The researchers, Andrew Pendleton and Andrew Robinson, find that "the use of share plans and high employee involvement in them is associated with high training coverage." They suggest that employee owners are more likely to invest in increasing their firm-specific skills because share plans "generate employee commitment and function to lock employees into the firm." As a result, employers are also more likely to invest in training because they face less risk that their investments in training will be lost to employee turnover.

Majority of Surveyed Indian Companies Offer Options

KPMG surveyed 350 public and private companies in India and found that nearly two-thirds offer stock options to employees. Indian firms were nearly twice as like to offer options than were global companies, and the report concluded that "Companies consider ESOPs as an incentive tool which enhances productivity, motivates employees and increases employees' interest in the company's overall performance" (employee stock option plans are referred to as ESOPs in India). It further noted that recruiting and retaining talent were the primary motivation for adopting broad-based options (see summary at this link).

New Member Resources from the NCEO

The members area of the NCEO's Web site now includes an index of research reports available at no charge to members. Topics include the ESOP repurchase obligation, executive compensation, corporate governance and more. We also added a list of training resources targeted to different positions in employee ownership companies: CEOs, board members, inside trustees, HR directors, CFOs, committee members, and ESOP participants.

National Equity Compensation Forum in Two Weeks

The Global Equity Organization (GEO) is hosting the first National Equity Compensation Forum in Scottsdale, Arizona on September 14-16. The NECF will allow decision makers to discuss strategic issues and best practices with senior-level experts and features presentations by the Great Place to Work Institute, Harvard University, and the London School of Economics. For more information or to register, visit www.necf.us.

Survey of Equity Compensation Behavior

Forfeiture rates and their application are one of the least understood aspects of ASC 718 and create numerous challenges in accounting for equity compensation. Stock & Option Solutions is conducting a brief survey to learn more, and the results will be used in an NCEO issue brief aimed to help companies ease the challenges of complying with ASC 718 requirements around forfeiture rates. To fill out the survey, click here.

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