OECD CONSULTATION IN 2015
A dangerous and irritating situation occurred in 2015 about ESOPs and
employee share ownership within the OECD. It was
suggested that ESOPs and employee share ownership
should be discouraged because putting all employees'
eggs in the same basket, especially considering
pension savings. A public consultation was open on this point, in view of the revision
of OECD's “Core Principles of Private Pension Regulation”.
the OECD heard our claims. We were informed that
the new "Core Principles of Private Pension Regulation"
will be adapted in accordance with our views.
Our response to the OECD was based on the following considerations:
The principle of diversification applies to employee share ownership
as to any other financial investment. It
is illustrated by the aphorism "do
not put all eggs in one basket."
However, employee share ownership is not just a financial investment.
It also has the character of an industrial
investment. This character is most evident
when the employees' stake reaches 100%
of the company's capital, which is the typical
case of employee share ownership is in SMEs.
However, it is also present, although more
incidentally, to the minority employee share
ownership in large companies.
If the aphorism of eggs and basket frequently applies to the diversification
of financial investments, another aphorism
applies better to industrial investment:
"The bird lays all eggs in the same
nest". Among the few exceptions, the
example of the cuckoo is well known. It
must be said: Employee share ownership is
not a cuckoo.
By concentrating its eggs in one nest, the bird manages security by
the particular care that this choice allows. So
is it also for employee share ownership as an
industrial investment. Employee share schemes
are usually supported by communication programs
and financial information and they are recognized
as a powerful tool for economic and financial
education, and thus, for risk control.
When the OECD project considers employee share ownership in its sole
dimension of financial investment, omitting that
of industrial investment, it makes a unilateral
choice. This position ignores the complexity of
employee share ownership. It is therefore inappropriate.
EFES response to OECD consultation
from ESOP Association and from Employee-owned
S Corporations of America
from KSLP (Czech Republic)
from AGP - Bundesverband Mitarbeiterbeteiligung
from EFES Belgium
from The Beyster Institute (USA)
from CONFESAL (Spain)
from Better Finance (EU)
from FAST - Federation of Staff Shareholders of