Employee owned companies’ shares underperform in Q1 of 2010 but show long term resilience
17 May 2010
Employee owned companies underperformed in the first quarter of
2010 when compared to the FTSE All-Share, according to the UK
Employee Ownership Index (EOI) published by law firm Field Fisher
Waterhouse LLP.
Employee owned companies’ share prices were up 3.2%, performing
worse than the FTSE All Share companies’ share prices which were up
5.4% in the quarter.
The EOI, compiled by the firm’s Equity Incentives team, monitors
the share price performance of listed companies, comparing the
performance of FTSE All-Share companies with companies that are
over 10% owned by employees.
In the last quarter of 2009, employee owned companies also
underperformed, however in the long term the picture is very
different, with the EOI demonstrating that employee owned companies
outperform FTSE All-Share companies over time.
The EOI started in 1992 and shows that over 17 years, employee
owned companies have outperformed FTSE All-Share companies each
year by on average 10%. Over successive three year periods
they have outperformed by 41% and over successive five year periods
by 78%.
| An investment of £100 in the EOI in 1992 would at the end of
March 2010 have been worth £711 whilst the same investment in the
FTSE All-Share Index would be worth £238. |
Graeme Nuttall, head of the Equity Incentives team at Field Fisher Waterhouse
says:
“The first quarter of this year saw employee owned companies
performing less well than the FTSE All-Share. If, however, we
look at performance over longer periods of time we see that despite
variations in relative performance from quarter to quarter,
the EOI demonstrates that in the long term employee owned companies
do better, proving to be more resilient than FTSE All-Share
companies.”
The Equity Incentives team at Field Fisher Waterhouse produces
quarterly reports on EOI performance which have been referred to on
Radio Four’s Today programme, BBC Two’s Newsnight and in Scotland
on Sunday. The team advises on employee ownership solutions for a
variety of business structures as well as incentive plans for UK
and overseas listed and private companies and has had detailed and
broad ranging input into Government share plans policy.
For further press information please
contact:
Louise Eckersley, PR Manager,
Field Fisher Waterhouse LLP on +44 (0)20 7861 4120.