Wednesday, May 4, 2016
Last week, Hamdi Ulukaya, founder and CEO of Chobani, announced a 10% company stock grant to all company employees. Chobani joined the ranks of high profile stock grants including Whole Foods, Starbucks, Apple and Twitter. Stock grants, while more common in tech industries, are a part of hybrid corporate law-employment law conversation on shared ownership. Employee ownership in companies can occur in several different forms such as ERISA-governed benefit plans where the company stock issued or bought as a part of a retirement saving plan. Alternatively, a stock grant may be structured as a bonus plan, a standard compensation, or a vesting employee benefit eligible after threshold years and types of service. All of these plans fall under the rubric of shared ownership. In 2015, the National Center for Employee Benefits estimated that over 9000 companies participated in some form of shared ownership.
In a similar vein, actors in the hit (and record-breaking with 16 Tony Nominations) musical Hamilton have entered into a profit-sharing agreement with producers. The deal is different for these actors, but the sentiment is the same in sharing profits, aligning interests, and promoting employee loyalty.
Shared ownership plans, especially the ERISA-governed ones can have specific tax and financing benefits for companies. Creating a shared ownership plan, however is often focused on creating certain firm-specific benefits such as recruiting and retaining talent, and improving firm performance by aligning interests between employees and the company. The recruitment and retention aspect can be especially valuable to start-up firms that struggle to compete with mature firms on salary and reputation. Empirical studies have found improved workplace performance, on average, for firms with shared capitalism plans, with positive effects observed most strongly when combined with policies such as low supervision, decision-making participation, and competitive pay.
I note these stories with particular interest for several reasons. The first is that I am routinely embarrassed by how little play I give employees in my corporation class . I seem all too happy to ignore this very important piece of the corporate power puzzle, engine for the machine, etc., etc. Second, I have been looking at shared ownership in the context of a recent research project, so look for more on that topic in a separate post once the project progresses. Third, my sense is that social enterprise movement will bring with it greater demands for shared ownership as a means to address social factors such as retirement security, employee autonomy and wage inequality. Look for more of these stories in the headlines and an emphasis on it in scholarship.