Field Fisher Waterhouse research: Employee-owned organisations are underperforming

Employee-owned organisations underperformed in the second quarter of 2011, dropping 9.4% compared to the FTSE All-Share which was up 0.9%, according to research by law firm Field Fisher Waterhouse.

Since The UK employee ownership index (EOI), which monitors the share price performance of listed organisations that are over 10% owned by employees, started in 1992, employee-owned organisations have outperformed FTSE All-Share organisations by an average of 11% each year.

Graeme Nuttall, head of the equity incentives team at Field Fisher Waterhouse, said: “In the second quarter of 2011 employee-owned organisations in the EOI clearly did not perform as well as the FTSE All-Share index.†

“But short-term under-performance has happened before and does not detract from the long-term message that employee ownership is a successful business model.

For example, during 2002, the EOI fell by around 50%, in comparison to the 20% to 30% fall of the FTSE indices. Over the final quarter of 2002, the EOI rallied and saw an increase of 14% in comparison to the 1% to 2% increase of the FTSE indices.

“What the EOI continues to show is the strength of the performance of employee-owned organisations over longer periods of time. They prove to be more resilient over time.”

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