Research shows the UK leads Europe in employee share participation

A report entitled “Annual Economic Survey of Employee Share Ownership in European Countries 2022” published by the European Federation of Employee Share Ownership (EFES) points to a decline in employee share ownership across Europe, except in the UK.

EFES produces a version of this report annually. It contains a lot of data on the pattern of employees’ share schemes in Europe, of which the most interesting and useful to today’s reader spans the period from 2006. But some of the data goes back to the end of WW2.

The survey covers 32 European countries, about 3,000 of Europe’s largest companies (listed and unlisted) and 34.5m employees. The UK is represented by 681 companies; 495 of them are listed and 186 are unlisted, of which six are co-operatives.

There is much of interest for data lovers, for those whose work brings them into contact with employees’ share schemes, either as a participant or practitioner, and for students of the way employee share participation in Europe has developed post WW2. There is not enough space in an article of this type to analyse and report in depth on the survey results but a free copy of the report can be obtained here.

Here is a summary of some of the key findings:

• 95% of Europe’s larger companies have adopted employee share participation plans;
• In 2022, the value of capital held by employees amounted to a record €447bn, up from €185bn in 2006;
• UK companies have adopted the highest number of broad-based employees’ share schemes;
• The UK and France have the highest numbers of employee shareholders;
• That said, the number of employee shareholders in Europe is lower than it was 10 years ago;
• However, this is not the case in the UK, where the number of employee shareholders has risen in the past 10 years.

Thus, EFES concludes that despite an increase in the amount of capital held by employees in Europe and the high incidence of employees’ share schemes on the continent, the number of employee shareholders has declined and is declining, except in the UK.

That is interesting but of greater significance is the analysis of executive versus all-employee schemes. The report finds that there are 9,600 executive and 6.3m employee participants in employees’ share schemes across Europe. EFES has calculated that €23m is attributable to each executive, whilst the amount attributable to what the report refers to as “ordinary employees” is €32,000 per head.

The average stake held by top executives across Europe is 1.62% (the figure for the UK is close to 1%). In the UK, the percentage of capital held by employees, including top executives, is about 2.5%, indicating that UK top executives hold less of their company’s capital than the rest of the workforce.

This is not replicated across Europe, where the cross-over point came in 2020 and now top executives across continental Europe hold a greater proportion of the capital than the rest of the workforce.

The EFES report makes interesting reading. It suggests some potential reasons for the variety and differences in its findings across Europe, including fiscal policies adopted by governments and the growing mobility of workforces as businesses become increasingly multi-national. Cultural differences and legal frameworks are also likely to be a factor.

MM&K specialises in the design and implementation of executive and all-employee share plans, for both national and multi-national clients. If you would like to discuss anything in connection with this article, please contact Paul Norris.

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