Employee Ownership Dwindling in Technology Companies?
Executive Director
In Tech Companies Are Shutting Employees Out of the Stock Market's Boom on the Fortune magazine website, Joseph Blasi observes that "the percentage of employees with equity stakes in innovative industries, such as computer services, declined from over half of all employees in that industry in the early 2000s to about a fifth of all employees by 2014."
What's behind the decline? Dr. Blasi argues that there are many factors: changes in the tax code changed the incentives for public companies to maintain ESOPs, companies reacted to stock option accounting standards by providing option grants to fewer employees, and the declining generosity of employee stock purchase plans.
He argues that these changes have led many HR practitioners to a new theory of compensation, based on the idea that "only executives and a few percent of top employees can really impact the bottom line and only they should have shares." He notes that "this view is held in spite of the fact that decades of scholarly research on broad-based employee share ownership concludes the opposite."