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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”.

Fortunately, 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.

More information

- OECD Public consultation

- Full EFES response to OECD consultation
- Response from ESOP Association and from Employee-owned S Corporations of America
- Comments from KSLP (Czech Republic)
- Comments from AGP - Bundesverband Mitarbeiterbeteiligung (Germany)
- Response from EFES Belgium
- Response from The Beyster Institute (USA)
- Response from CONFESAL (Spain)
- Response from Better Finance (EU)
- Response from FAST - Federation of Staff Shareholders of Thales






For information and contact
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E-mail: efes@efesonline.org
Web site: www.efesonline.org
EFES' objective is to act as the umbrella organization of employee owners, companies and all persons, trade unions, experts, researchers, institutions looking to promote employee ownership and participation in Europe.