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Employee owned companies outperformed the FTSE All-Share in 2010, according to the UK Employee Ownership Index (EOI) published by law firm Field Fisher Waterhouse LLP. Employee owned companies' share prices were up 16.3%, performing better than the FTSE All Share companies' share prices which went up by 11.3% over the year.
The EOI, compiled by the firm's Equity Incentives team, 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.
Analysis of 2010 shows that in the final quarter employee owned companies also outperformed the FTSE All-Share, with shares up 11.5% compared to FTSE All-Share company share prices which were up 6.8%.
This evidence of long-term outperformance helps support the Coalition Government's aim of substantial long-term change in how public sector services are provided by encouraging their provision by employee-owned mutuals.
The EOI shows that over 18 years, employee owned companies have outperformed FTSE All-Share companies each year by on average 11%. Over successive three-year periods they have outperformed by 38% and over successive five-year periods by 74%.
| An investment of £100 in the EOI in 1992 would at the end of December 2010 have been worth £860 whilst the same investment in the FTSE All-Share Index would be worth £249. |
Graeme Nuttall, head of the Equity Incentives team at Fieldfisher says:
"By monitoring the share price performance of employee owned companies we have seen that over the year, those shares have outperformed the FTSE All-Share Index. This is also reflected when analysing performance over the last three, five and ten years. This sends a strong message about the long term success story of employee ownership as a business model and lends support to the Coalition Government's plans to make employee led mutuals and employee ownership a crucial part of public services reform."
The Equity Incentives team at Fieldfisher produces quarterly reports on EOI performance which have been referred to on Radio Four's Today programme, BBC Two's Newsnight and in Scotland on Sunday. The team advises on employee ownership solutions for a variety of business structures, including under the Government's right to provide and right to request programmes. 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.
The firm recently co-authored a practical "how to guide" for public sector organisations looking to become employee-led mutuals. For further information, click here to view a copy of "How to become an employee owned mutual - an action checklist for the public sector".
For further press information, please contact:
Louise Eckersley, PR Manager, Field Fisher Waterhouse LLP on +44 (0)20 7861 4120
EOI
The UK Employee Ownership Index is compiled by the Equity Incentives team at Fieldfisher and tracks the performance of UK-quoted companies that are over 10% owned by employees (excluding main board directors) or employee trusts. The degree of employee share ownership is determined on the basis of best available information. The UK Employee Ownership Index does not necessarily include all quoted companies with a significant degree of employee ownership.
FTSE is a registered trade mark of London Stock Exchange plc and The Financial Times Limited. All-Share is a registered trade mark of FTSE International Limited.
Field Fisher Waterhouse LLP
Fieldfisher is a European law firm providing commercial solutions across a range of industry sectors. We have a particular focus on companies that are highly regulated and those with intellectual property and technology driven business models.
The firm has over 140 partners, 240 other lawyers and nearly 300 support staff across offices in Brussels, Hamburg, Paris, London and Manchester. The firm also has an exclusive relationship with Italian firm, La Scala.
Our main areas of practice are corporate, IP, technology and regulatory law. We also have leading expertise in areas such as banking and finance, financial services, real estate, dispute resolution, personal injury and medical negligence. We are acknowledged as leading experts in sectors such as technology and communications, hotels and leisure and media as well as for our public sector work.
We have an international client base that includes listed and unlisted companies, multinationals, financial institutions, professional partnerships, trade associations and Government departments.