Employee owned companies marginally underperformed in the first quarter of 2011, dropping 1% compared to the FTSE All-Share which was up 0.2%.
In the long term view however, employee owned companies continue to outperform FTSE All-Share companies, according to the UK Employee Ownership Index (EOI) published by law firm, Field Fisher Waterhouse LLP.
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.
The EOI started in 1992 and shows that despite the current drop in performance, 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 37% and over successive five-year periods by 71%.
|An investment of £100 in the EOI in 1992 would at the end of March 2011 have been worth £861 whilst the same investment in the FTSE All-Share Index would be worth £250.|
Graeme Nuttall, head of the Equity Incentives team at Fieldfisher says:
"Employee owned companies did not perform as well as the FTSE All-Share in the first quarter of 2011 but the index demonstrates that in the long term employee owned companies do better - they may show short term performance variability but prove to be more resilient over time. Long term, employee ownership as a business model is successful and this trend supports the Government's decision to promote employee led mutuals and employee ownership as 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
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.
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