Employee ownership index companies continue to out-perform over the long term
Companies in the UK Employee Ownership Index (EOI) outperformed the FTSE All-Share in the first nine months of 2012.
Companies in the UK Employee Ownership Index (EOI) outperformed the FTSE All-Share in the first nine months of 2012. Employee owned companies' share prices were up 5.4% compared with the FTSE All-Share companies' share prices which went up by 4.9%.
The EOI, published by law firm Fieldfisher, slightly under-performed the FTSE All-share in Q3 of 2012; EOI shares were up 3.4% whilst the FTSE All-share rose 3.7%. However, over the long term, companies in the EOI outperform FTSE All-Share companies by an average of 10% each year since the EOI began.
The EOI is published by the Equity Incentives team at law firm, Field Fisher Waterhouse LLP. It monitors the share price performance of listed companies, comparing the performance of FTSE All-Share companies with companies that are over 10% owned by employees.
|An investment of £100 in the EOI when the index began in January 1992 would at the end of September 2012 have been worth £661 whilst the same investment in the FTSE All-Share Index would only be worth £244.|
Graeme Nuttall, head of the Equity Incentives team at law firm Fieldfisher, and as the Government's Independent Adviser on Employee Ownership author of "Sharing Success: The Nuttall Review of Employee Ownership, says:
"The Employee Ownership Index continues to play an important role in demonstrating the benefits of employee ownership. The share prices of companies in the Index are higher over the long term than FTSE All-Share companies. The Index should encourage more listed, as well as private, companies to look at employee ownership as a means of achieving growth."
Please note that there are two changes to the EOI in this quarter which have retrospective effect and which improve the EOI's performance to date. One company has been excluded from the EOI due to uncertainty as to whether its employee benefit trust is for the benefit of its employees or the employees of a connected company. Another company was found to meet with the qualifying conditions for the EOI and consequently it was retrospectively added to the Index.
Notes to Editors
The Employee Ownership Index
The EOI tracks the performance of UK-quoted companies that are over 10% owned by employees (excluding main board directors) or employee trusts. The EOI is regularly referred to in national, regional and sector media including The Independent, The Guardian, The Daily Mail, The Mail on Sunday, The Scotsman, Scotland on Sunday, The Yorkshire Post, Employee Benefits, and thisismoney.co.uk and has been cited in the Today Programme (BBC Radio 4) and Newsnight (BBC 2).
The degree of employee share ownership is determined using the best available information. The UK Employee Ownership Index does not necessarily include all eligible listed companies.
Equity Incentives at Fieldfisher
The UK Employee Ownership Index is compiled quarterly by the Equity Incentives team at law firm Fieldfisher. The team provides employee ownership advice and solutions for a variety of business structures, including public sector mutualisations. It also advises on incentive plans for UK and overseas listed and private companies and has had detailed and broad ranging input into Government share plans policy.
Graeme Nuttall is a partner at European law firm Fieldfisher where he is head of the Tax Practice and leads the Equity Incentives Group. Graeme is dual qualified as a solicitor and a chartered tax adviser. He is recognised as a leading expert on employee share plans with particular expertise in employee owned businesses. On 8 February 2012 he was appointed the Government's independent adviser on employee ownership, a part-time voluntary role. The Nuttall Report was published on 4 July 2012. He is a Cabinet Office Mutuals Ambassador. As a member of the HM Treasury Employee Ownership Advisory Group, he helped develop the HM Revenue and Customs approved share incentive plan and enterprise management incentives arrangement. He also drafted the Employee Share Scheme Bill, a successful Private Member’s Bill. He is legal adviser to the Employee Ownership Association, the voice of co-owned business in the UK. Graeme and others at Fieldfisher contributed to “How to become an employee owned mutual – an action checklist for the public sector” (2011). Graeme has also helped develop employee ownership in other countries.
Field Fisher Waterhouse LLP
Fieldfisher is a European law firm providing commercial solutions across a range of industry sectors. The firm has a particular focus on companies that are highly regulated and those with intellectual property and technology driven business models.
The firm has over 150 partners, 240 other lawyers and nearly 300 support staff across offices in Brussels, Dusseldorf, Hamburg, Paris, London, Manchester, Munich and Palo Alto.
The main areas of practice are corporate, IP, technology and regulatory law. Fieldfisher also has leading expertise in areas such as banking and finance, financial services, real estate, dispute resolution, personal injury and medical negligence. The firm is acknowledged as leading experts in sectors such as technology and communications, hotels and leisure and media as well as for our public sector work.
Fieldfisher's tax blog: http://taxdeductionsblog.ffw.com/
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