ESOP Companies Report 2011 Economic Upturn

Since the Employee Ownership Foundation’s first annual Economic Performance Survey of ESOP companies more than 20 years ago, a large majority (93.3%) of survey respondents reported that creating employee ownership through an ESOP was “a good business decision that has helped the company.” This figure has consistently been more than 85% since 2000. Furthermore, the 21st annual survey found that 76% of respondents indicated the ESOP positively affected the overall productivity of the employees. Both profitability and revenue were up from earlier years—70.5% reported a profitability increase and 76.2% noted a revenue increase. In terms of stock value, the majority (80%) said it increased as determined by outside independent valuations; 17.4% of the respondents reported a decline in share value and 2.6% reported no change.

For the first time, the survey asked, “In what year was your ESOP established?” The average age of the ESOP was 16 years with 1996 the average year for establishment.

“In looking at past results, it’s interesting to see performance numbers in a significant reverse of what was reported a few years ago during the Great Recession,” said Employee Ownership Foundation President J. Michael Keeling. “Employees with employee stock ownership, including those with ESOPs, in general, have more sustainable employment. Hopefully our national leaders, including the current group of those running for president, of both parties, will take note and understand that we need national policies to encourage employee stock ownership among working Americans.”

(Cont’d…)

The survey asked the companies, all of which are members of The ESOP Association, to rate their performance in 2011 relative to 2010:

• 68.5% indicated a better performance, 17% indicated worse and 14.5% indicated a nearly identical performance to the previous year;

• 76.2% indicated revenue increased, 23.8% indicated revenue decreased;

• 70.5% indicated profitability increased, 29.5% indicated profitability decreased; and

• 63.8% of companies indicated that they have created an ESOP education program or ESOP advisory committee since establishing the ESOP.

The 2012 Economic Performance Survey was distributed to The ESOP Association’s more than 1,400 members in June 2012. The results are based on 450 responses, a 32% response rate.