Employee owned companies’ shares continue to underperform in Q3 of 2011 according to Employee Ownership Index

Employee owned companies’ shares continue to underperform in Q3 of 2011 according to Employee Ownership Index

Employee owned companies’ shares continue to underperform in Q3 of 2011 according to Employee Ownership Index

Employee owned companies underperformed in the third quarter of 2011, dropping 18.2% whilst the FTSE All-Share was down 14.3%.

The UK Employee Ownership Index (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.

The EOI started in 1992 and shows that, despite the drop in performance seen in 2011, employee owned companies have outperformed FTSE All-Share companies by on average 12% each year.  Over successive three-year periods they have outperformed by 37% and over successive five-year periods by 71%. 

An investment of £100 in the EOI in 1992 would at the end of September 2011 have been worth £639 whilst the same investment in the FTSE All-Share Index would be worth £216.

Graeme Nuttall, head of the Equity Incentives team at Fieldfisher says:

“Employee owned companies did not perform as well as the FTSE All-Share index in the third quarter of 2011.  One reason for the underperformance is that the EOI is currently heavily weighted towards niche financial services companies and fund managers.  In the year to date, the EOI is down 25.8% compared to the FTSE down 13.3%, a relative under-performance of 12.5% which is on a par with the EOI's other under-performing years of 1992 and 2002.  Like 2011, these were also recession recovery years.  However the index demonstrates that in the long term employee owned companies perform better and continue to be a successful business model."

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.

For further information, please contact:

Louise Eckersley, PR Manager, Field Fisher Waterhouse LLP on 020 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 150 partners, 240 other lawyers and nearly 300 support staff across offices in Brussels, Dusseldorf, Hamburg, Paris, London, Manchester and Munich.

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.