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The Employee Ownership Update

Loren Rodgers

January 2, 2015

(Loren Rodgers)

Vanguard Study: Fewer Companies Offering Company Stock in Retirement Plans

In December, Vanguard released a study of 1,152 companies for which it provided administration services and found that the number of plan sponsors offering company stock fell from 11% in December 2005 to 8% in June 2014. The data includes defined contribution plans and consolidates all plans offered by a single company. The study reported that a major driver of this decrease was companies changing the design of their plans, with about one-third of company stock funds being eliminated or closed to new money over that period. Although 8% of companies still have company stock in their plans, only 6% of companies still actively offer company stock as an investment option.

The report also found that fewer participants were choosing company stock: in 2005, 66% of participants who were offered company stock held such stock. That percentage has steadily declined, and Vanguard reports that it is 53% in 2014. Participants also are diversifying more. The percentage of participants with company stock concentrations over 20% of plan assets fell from 17% in 2005 to 8% in 2014.

The report also notes that "Company stock plans tend to be more generous and well-funded than non-company-stock plans. Median account balances are higher in company stock plans, as are median employee and employer contributions." These higher value reflect the increased likelihood of employer contributions in connection with company stock plans. The report also notes that 67% of company stock plans allow immediate diversification of employer contributions.

UK Firm Invests in Employee Ownership

Capital for Colleagues, a publicly traded investment fund in the United Kingdom that invests in employee-owned businesses, reported that its year-end net asset value (NAV) per share rose 5% in the four months following its August initial public offering. Investments range from $75,000 to $600,000 (50,000 to 400,000) in businesses such as accounting firms, construction materials, retail, and IT services. The fund hold both notes and equity. It targets privately held companies, though its $5.2 million (3.4 million) net assets are roughly half in publicly traded companies and half in privately held companies. Chief executive John Eckersley said: "Employee ownership continues to gain distinction as a proven, successful business model."

Comment by NBA Players Association Director Raises Idea of Player Ownership

The new executive director of the NBA Players Association, Michelle Roberts, is asserting, as paraphrased by ESPN, that club owners are expendable. Commenting at on Robert's remarks, Matthew Pulver writes that the implication of her position is that the players should be the owners of the teams. He writes, "such a remedy for the league might rouse the imagination of Paul family libertarians, Bernie Sanders-wing progressives, and many in the great swath in between. 'Why can't we all own where we work?' Americans might start to ask."

Worker Cooperative Fellowship Program

The Democracy at Work Institute is seeking worker cooperative development leaders for its 10-month fellowship program. The program, from February to December, is intended for mid-career worker cooperative developers interested in exploring the question of scale for worker cooperatives. Applications are due Friday, January 9, 2015, and a virtual info session will take place on January 6 at 12:30 Pacific.

The Year 2014 in the United Kingdom

In his retrospective on 2014, the UK Employee Ownership Association's Iain Hasdell noted that the number of employee-owned businesses in the UK increased by 9% during 2014, and the sector now is roughly the same size as the UK's aerospace industry. Hasdell reflected on new tax incentives and the continued success of employee ownership in providing public services. Noting that employee ownership is on track to meet his goal of representing 10% of the UK's economy by 2020, Hasdell said, "we are on course to deliver our overall ambition to ensure the UK economic recovery is one in which employee ownership plays a significant role in the structural reform and rebuilding of our economy."

J. Robert Beyster: 1924 to 2014

Dr. J. Robert Beyster, a former Navy ensign and scientist at Los Alamos, founded one of the best-known employee ownership companies in the United States, Science Applications International Corporation (SAIC), in 1969. He died on December 22 at his home in California. In its obituary for Beyster, the New York Times quotes his book, The SAIC Solution: "I have found that employees are more patient investors than the public. They are willing to wait longer for returns because they want a good place to work. They allow the company to invest in long-term growth and not just short-term gains." Beyster created the Foundation for Enterprise Development and the Beyster Institute at UC San Diego.

NCEO Board Elections: January 2 to February 3

Members in good standing of the NCEO are eligible to vote for their representatives on our board of directors. The election period is January 2 to February 3. All members should have received an email invitation to the ballot. The invitation includes a secure link to the ballot and your member number, which is required to cast a valid ballot. If you believe you should have received an invitation to the ballot and you have not received one, please check your spam filter. You may also be prevented from receiving an invitation if you have unsubscribed from our email bulletin. Contact Loren Rodgers ( with any questions about the election, or contact our staff (email or call 510-208-1300) to request your member number or renew your membership.

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