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Press Release

Employee owned companies’ shares underperform in Q2 of 2011 according to Employee Ownership Index

31/08/2011

Locations

United Kingdom

Employee owned companies underperformed in the second quarter of 2011, dropping 9.4% compared to the FTSE All-Share which was up 0.9%. Read more >

Employee owned companies underperformed in the second quarter of 2011, dropping 9.4% compared to the FTSE All-Share which was up 0.9%.

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 11% 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 June 2011 have been worth £767 whilst the same investment in the FTSE All-Share Index would be worth £242.

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

“In the second quarter of 2011 employee owned companies in the EOI clearly did not perform as well as the FTSE All-Share index.  But short term under-performance has happened before and does not detract from the long-term message that employee ownership is a successful business model. For example, during 2002, the EOI fell by around 50%, in comparison to the 20% - 30% fall of the FTSE indices. Over the final quarter of 2002, the EOI rallied and saw an increase of 14% in comparison to the 1% - 2% increase of the FTSE indices. What the EOI continues to show is the strength of the performance of employee owned companies over longer periods of time.  They prove to be more resilient over time.”

EOI vs FTSE from Jan 1992 to June 2011

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 press information, please contact:
Louise Eckersley, PR Manager, Field Fisher Waterhouse LLP on +44 (0)20 7861 4120

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