The Employee Ownership Update
July 2, 2018
NCEO Employee Ownership Index Doubles S&P Performance for Its First YearOn June 19, 2017, the NCEO created the Employee Ownership Index, an index of 28 publicly traded companies that had both broad-based employee ownership and had won one of three major national employer rating awards, each of which puts a high emphasis on employee engagement (Fortune's Best Companies to Work for, the Gallup Engagement Index, and the Enterprise Engagement Alliance awards). Broad-based employee ownership included ESOPs where there was an average account balance of $30,000 or more and companies that provided equity grants to most or all full-time employees.
For the first year, the Employee Ownership Index has a 30.3% return; the S&P 500 had a 15.5% return. The index was expanded to 30 companies this June.
Research has overwhelmingly shown that companies that have broad-based ownership and high employee involvement in work-level decisions outperform other companies. This is the first time, however, that an index has been created that people can invest in.
The fund is available at Motif, an online trading platform that allows users to create their own "motif," or basket of stocks, to invest in. Investors can make a motif an option for other users to buy. When you buy a "motif," you are not buying a fund but rather are investing in all the stocks and/or ETFs that make up that motif. If you want to invest in the Employee Ownership Index, you need to go to the Motif website and open an account. Once you have done that, you can trade the Employee Ownership Index. Full disclosure: the NCEO receives a nominal ($1) commission on each trade.
Influential UK Report Urges More Government Support for Employee OwnershipThe Ownership Dividend, a new report from an independent panel of leading business leaders in the UK, urges the government to take several steps to promote employee ownership, which it sees as crucial to improving the UK's economy and creating a more equitable society. The group was chaired by Baroness Sharon Bowles, a member of the Liberal Democratic Party. She is often described as the most influential Briton in the development of European Union policy and the most influential woman in politics in the UK.
Key proposals include greater outreach and education efforts, support for developing worker cooperatives, greater tax benefits for employee ownership trusts (somewhat like ESOPs in the U.S.), higher limits on deductibility in employee savings plans focused on company stock, support for mutuals converting to employee ownership (these are social service organizations typically owned by local governments), and regulatory changes.