Employee stock ownership plans have gained popularity in the United States, according to Steve Clem, program coordinator at the Ohio Employee Ownership Center at Kent State University.
There are more than 10,000 employee ownership enterprises in the United States; of those, about 1,500 are plans in which employees hold 50 percent or more of the stock, Clem said. In general, the average is about 30 percent.
Studies by the General Accounting Office have shown that such plans are most successful when employee owners participate in management decisions, Clem said.
``On the whole, these [companies] are more productive and do better than their non-ESOP counterparts,'' he said.
``The employees, obviously, won't run the plant, but they need to be on board.''
Clem stressed that employee ownership ``first and foremost, is a retirement plan,'' but differs in that it can borrow money, usually to finance the buyouts.
Though ESOPs work best when companies are profitable, in some cases they can be an option used to save failing plants, Clem said.
In such cases, employees must decide whether they are interested in buying, which might mean concessions such as cuts in pay to help finance the buyout, Clem said.
Before a loan can be secured, banks require feasibility studies to determine if the market outlook is good and if the plant is competitive.
