Leaders of ESOP Companies Still Support Employee Ownership

Even though ESOPs were not immune to impacts of the recent recession, leaders of ESOP companies still feel strongly that their company is better off than their non-ESOP counterparts, according to a new survey.

Results from the Employee Ownership Foundation’s 19th Annual Economic Performance Survey of ESOP (employee stock ownership plan) companies that are members of The ESOP Association, 91% of survey respondents reported that creating employee ownership through an ESOP was “a good business decision that has helped the company.” In addition, 63% of respondents indicated the ESOP positively affected the overall productivity of the employees.    

Six in ten companies (61%) indicated they have created an ESOP education program or ESOP advisory committee since establishing their ESOP.   

According to a press release, in terms of profitability and revenue, as expected, both were down from previous years — 63% of respondents reported that profitability decreased and 71% of respondents noted that revenue decreased.  On the other hand, for a majority of respondents (59%), the company’s stock value increased as determined by outside independent valuations, 37% of the respondents reported a decline in share value, and 4% reported no change.  Of those who did report a deceased share value, 87.3% reported the decline was less than 30% from prior years.  

One third (33.5%) of respondents indicated a better performance in 2009 than in 2008; 54.3% indicated a worse performance; and 12.2% indicated a nearly identical performance. Twenty-nine percent indicated revenue increased; 71% indicated revenue decreased. Thirty-seven percent indicated profitability increased; 63% indicated profitability decreased.  

The 2010 Economic Performance Survey results are based on 418 responses.