NCEO “Employee Ownership Index” Outperforms S&P 500

The National Center for Employee Ownership (the NCEO) recently reported that its Employee Ownership Index has doubled the performance of the S&P 500 in its first year of existence. Specifically, the NCEO announced a return of 30.3% for the Employee Ownership Index in its debut year, compared to a return of 15.5% for the S&P 500. As of July 30, the one-year return for the Employee Ownership Index was 40.5%.

The Employee Ownership Index is a community fund created by the NCEO for the Motif online trading platform, and it consists of 30 publicly traded companies that:

(1) have broad-based employee ownership (meaning the company maintains an ESOP with an average account balance of at least $30,000 or the company provides equity grants to most or all full-time employees); and

(2) have won Fortune’s Best Companies to Work For, the Gallup Engagement Index, or an Enterprise Engagement Alliance award (each of which emphasizes employee engagement).

The performance of the Employee Ownership Index illustrates the NCEO’s consistent message regarding the measurable beneficial impact of employee ownership, as the NCEO notes that “[r]esearch has overwhelmingly shown that companies that have broad-based ownership and high employee involvement in work-level decisions outperform other companies.”