Employee-owned firms outperform FTSE firms

Employee-owned organisations outperformed the FTSE all-share companies in the first nine months of 2012, according to research by Field Fisher Waterhouse.

The UK Employee ownership index (EOI), published by the law firm’s equity incentives team, monitors the share-price performance of listed organisations, comparing the performance of FTSE all-share companies with organisations that are 10% owned by employees.

It found that employee-owned organisations’ share prices were up by 5.4% compared with FTSE all-share companies’ share prices, which went up by 4.9%.

However, in the third quarter of 2012, EOI shares were up by 3.4%, while the FTSE all-share rose by 3.7%.

Since the EOI began in January 1992, employee-owned organisations have outperformed FTSE all-share companies by an average of 10% each year.

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Graeme Nuttall, head of the equity incentives team at Field Fisher Waterhouse, and the government’s independent adviser on employee ownership (pictured), said: “The employee ownership index continues to play an important role in demonstrating the benefits of employee ownership.

“The share prices of organisations in the index are higher over the long term than FTSE all-share companies. The index should encourage more listed, as well as private, organisations to look at employee ownership as a means of achieving growth.”