Employee ownership index companies continue to out-perform over the long term
Companies with significant employee ownership outperformed the FTSE All-Share in the first quarter of 2013, according to the UK Employee Ownership Index (EOI) published by law firm Field Fisher Waterhouse LLP. The share prices of companies’ in the EOI were up 13.7%, outperforming the FTSE All Share companies’ share prices which were up 9.3%.
The EOI is published by the Equity Incentives team at 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.
An investment of £100 in the EOI when the index began in January 1992 would have been worth £745 by the end of March 2013, whilst the same investment in the FTSE All-Share Index would only have been worth £275.
Graeme Nuttall, head of the Equity Incentives team at Fieldfisher, and author of "Sharing Success: The Nuttall Review of Employee Ownership" in his capacity as the Government's Independent Adviser on Employee Ownership, says:
"The Employee Ownership Index has got off to a great start in the first quarter of 2013. As the quarter came to a close, the Deputy Prime Minister Nick Clegg gave the inaugural Robert Oakeshott Memorial Lecture. He explained how the UK economy needs to be rewired to assess and share risk properly, to motivate and reward workers properly and, in particular, to think for the long term. Nick Clegg asked those who have not yet considered employee ownership 'to open yourselves to the possibility - look, seriously at what greater employee engagement can do for you.' He asked professional bodies, lawyers and accountants, to 'understand this model so that you can advise your clients on the benefits'."
The Employee Ownership Index is a useful way for those wishing to demonstrate the benefits of employee ownership to do so, especially the long term benefits.