The Employee Ownership Update
September 1, 2017
Is Employee Ownership Contributing to China's Stock Market Rally?As stocks on the Shanghai rose to a 20-month high, analysts cited China's ownership reforms as contributing to investor confidence. As quoted in China Daily, Gao Ting, head of China strategy at UBS Securities, cited reforms by China Unicom, the country's second-largest mobile phone provider, which include a diversified board of directors and employee ownership.
Employee Ownership and Mortgage Finance CompaniesIn a HousingWire article titled Are Employee Stock Ownership Plans the key to healthier mortgage finance companies?, Brena Swanson suggests the answer may be "yes." Gellert Dornay, president and CEO of Axia Home Loans, which became 100% owned by its employees back in September 2016, says, "When employees run the company, our decision methodology is different. Everything is in the primary best interest of the shareholders, who are the employees." He also says that when employees have "skin in the game," it could lead to better decisions about making prudent risk-management decisions in the loans they choose to make.
Catholic Labor Day Message on Inequality Advocates Employee OwnershipIn the U.S. bishops' annual Labor Day statement, Bishop Frank Dewane, chair of the bishops' Committee on Domestic Justice and Human Development, said that economic inequality is a major issue, and that "Excessive inequality" threatens cooperation among all people in society "and the social pact it supports." He suggested several options, and worker ownership was prominent among them: "Worker-owned businesses can be a force for strengthening solidarity, as the Second Vatican Council encouraged businesses to consider 'the active sharing of all in the administration and profits of these enterprises in ways to be properly determined... The Catholic Campaign for Human Development has helped in the formation of many employee-owned companies which provide jobs in communities where work opportunities may be scarce."
Voices of Employee OwnershipEmployee-owned National Van Lines produced a video, featuring the stories of its former owners and its current employee-owners. You can watch this video, along with many others, in the video collection on our sister website esopinfo.org at www.esopinfo.org/videos/.
ESOP Executive to Run for SenateJane Reybould, who runs employee-owned B&R Stores with her brother, announced that she will run for the U.S. Senate seat in Nebraska as a Democrat.
Are PE Firms Turning to ESOPs?Writing in the Business Journals, Joe Rankin notes that, although private equity firms have traditionally not invested in ESOP transactions, they may now be showing more interest. He notes that a possible structure is for the PE firm to provide subordinated notes in return for warrants.
Local Voices: Community Wealth and Employee OwnershipWriting on the website of his local paper, the Lancaster Online (Pennsylvania), Craig Dalen of the company Assets notes that businesses in his community are working hard to attract and retain good workers, and that people in the community are worried about the small town's high poverty rate of 29%.
Drawing on research by the NCEO finding that employee-owners have dramatically higher net household wealth (see www.OwnershipEconomy.org), he proposes that employee ownership be used. He quotes Chip Cargas, chairman and CEO of Cargas Systems, who says, "Direct employee ownership helps us attract and engage talented and caring employees. That, in turn, helps us grow sustainably, add rewarding local jobs and share increasing success with our employees, customers, owners, partners and community."