Electricite de France Launches Major Employee Ownership Initiative

As part of its partial privatization, Electricite de France has undertaken the largest continental European employee ownership plan to date. Employees can borrow money to buy up to 15% of the stock at 10% off the share price. Employees have to hold on to their shares for five years. If the shares go down, they get their cash back. If they go up, based on a multiple of the average stock price over the next five years, employees get the stock. The loans are made at a required rate of return given the risks, and the underwriter tries to hedge the debt for protection. In a case study of the Dexia Group in the September/October 2005 issue of the Employee Ownership Report (the NCEO's newsletter for members, archived in the members-only area of this site), we explained how these kinds of plans work in more detail.

Unions at the company had adamantly opposed privatization, but have taken up the offer eagerly given its terms.