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More employee owned companies showed positive growth in their share price in the fourth quarter of 2011 than in the third quarter for the same year. This is according to the UK Employee Ownership Index which monitors the share price performance of listed companies that are over 10% owned by employees and compares their performance to the FTSE All-Share index.
In Q3 2011, only one company listed in the Employee Ownership Index (EOI) showed a positive return in that quarter. By the end of 2011 however, 35% of companies in the EOI showed positive share price growth. Those companies are in the health, communications, financial services and industrial transportation sectors.
This improvement was not enough to outperform the FTSE All-Share in the quarter. In Q4, the EOI dropped 4.2% compared to the FTSE All-Share, which was up 7.7%. However, it remains the case that employee owned companies have outperformed FTSE All-Share companies by an average of 10% each year since the EOI began in 1992. Over successive three-year periods, the EOI shows that employee owned companies have outperformed FTSE All-Share companies by 36%. This figure increases to 65% when measured over successive five-year periods. An investment of £100 in the EOI in 1992 would have risen to £612 at the end of December 2011 whilst the same investment in the FTSE All-Share Index would be worth only £233.
Graeme Nuttall, head of the Equity Incentives team at Fieldfisher, the law firm which publishes the Employee Ownership Index, and the Government's independent adviser on employee ownership, says:
"The Government's recently announced drive to introduce the concept of employee ownership into the mainstream British economy applies to all companies, and although there is an emphasis on private companies, the UK Employee Ownership Index helps show that higher percentages of employee shareholdings in listed companies can also deliver improved corporate outcomes, particularly in the long term."
For further information, please contact:
Louise Eckersley, PR Manager, Field Fisher Waterhouse LLP on 020 7861 4120
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 and regional press including The Independent, The Guardian, The Daily Mail, The Mail on Sunday, The Scotsman, Scotland on Sunday and The Yorkshire Post 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 quoted companies with a significant degree of employee ownership.
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 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.
Graeme Nuttall
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. 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) which was welcomed by Cabinet Office Minister Francis Maude and the chair of the Prime Minister’s Mutuals Taskforce, Professor Julian Le Grand, at its House of Commons launch in March 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 and Munich.
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.
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