Employee Ownership Fact Sheet

                        EMPLOYEE OWNERSHIP FACT SHEET
   Growth of Employee Ownership: As of the end of 1993, the National
   Center for Employee Ownership estimated there was approximately 9,500
   employee stock owner plans (ESOPs) and similar ownership plans cover
   over 10,000,000 employees. In addition, several million employees
   participate in plans that offer stock options to most or all of a
   company's employees or in which most or all employees buy stock,
   usually at a discount (precise numbers are not available). Employee
   ownership has been growing at roughly 300 - 600 new plans and 300,000
   - 600,000 new plan participants a year in recent years. ESOPs now
   control over $150 billion in corporate stock. Employees own another
   $140 billion in company stock through 401(k) plans and an unknown
   amount through broad stock option and stock purchase plans. At least
   100 large public companies, and thousands of smaller companies, now
   give stock options to most or all employees. 
   Major Uses of Employee Ownership: About half the plans are used to
   provide a market for the shares of a departing owner of a profitable,
   closely-held company. Most of the remainder are used either as a
   supplemental employee benefit plan or a means to borrow money in a
   tax-favored manner. Less than 5% of the plans are used either as a
   defense against a hostile takeover or to save a failing company. 
   Employee Ownership and Corporate Performance: Companies that combine
   employee ownership with employee workplace participation programs show
   subgains in performance. A 1986 National Center for Employee Ownership
   study found that employee ownership firms that practice participative
   management grow 8-11% per year faster with their ownership plans than
   they would have without them. Note, however, that participation plans
   alone have little impact on company performance. These NCEO data have
   been confirmed by several subsequent academic studies that find both
   the same direction and magnitude of results. ESOPs also perform well
   in large leveraged transactions. A 1989 NCEO study of the largest
   majority leveraged ESOP transactions found that these companies were
   doing as well as or better than their competitors, despite their heavy
   debt. A 1991 NCEO study showed that 30% of non-ESOP leveraged buyouts
   were bankrupt, in de, or in serious trouble, while only 10% of ESOP
   LBOs faced similar problems. 
   How ESOPs Work: Companies set up a trust fund for employees and
   contribute either cash to buy company stock, contribute shares
   directly to the plan, or have the plan borrow money to buy shares. If
   the plan borrows money, the company makes contributions to the plan to
   enable it to repay the loan. Contributions to the plan are
   tax-deductible. Employees pay no tax on the contribution until they
   receive the stock when they leave or retire. They then either sell it
   on the market or back to the company. Provided ESOPs own 30% of
   company stock, owners of private firms selling to an ESOP can defer
   taxation on their gains by reinvesting in securities of other company,
   and, in certain cases, banks can deduct 50% of the interest income
   they receive from loans to ESOPs. 
   How Employees Fare: According to a 1990 National Center for Employee
   Ownership study, an employee making $20,000 a year in a typical ESOP
   would accumulate $31,000 in stock over 10 years. Only 3% of all ESOP
   participants give up pension plans for their ESOPs and only 4% of the
   ESOP companies require wage concessions. For the large majority of
   ESOP participants, ownership is an additional benefit contributed to
   them by the company. 
   Major Examples of Employee Owned Firms: The large companies
   principally owned by employees are: Publix Supermarkets (80,000
   employees), United Airlines (75,000 employees), Science Applications
   (16,000 employees), Avis (car rental, 12,500 employees), Ralph M.
   Parsons Corp. (engineering, 10,000 employees), and Amsted Industries
   (8,000 employees). Among other notable employee ownership firms are
   W.L. Gore Associates (maker of Gore-Tex), Quad/Graphics (one of the
   country's largest printers), Journal Communications (publisher of the
   Milwaukee Journal and Milwaukee Sentinel), and Hallmark Cards. 
   Public Company ESOPs:Eighty-five percent of all ESOPs are in private
   companies, but ESOPs have become more popular in public firms as well.
   Public company ESOPs typically own 5-20% of the firms stock. About 15%
   are used as a takeover defense, and the rest to replace existing
   matching contributions to other employee benefit plans (something
   relatively rare in private firms). Employees own over 4% of over 1,000
   public firms. 
   About the National Center for Employee Ownership (NCEO):The NCEO is a
   private, non-profit membership, information, and research
   organization. Supported by its members and services, the NCEO serves
   as a central source of information on employee ownership. Attribution
   The National Center for Employee Ownership
   1201 Martin Luther King Jr. Way
   Oakland, CA 94612
   email: nceo@iia.org