ESOP Companies Weathering Tough Times
NCEO founder and senior staff member
Based on a quick survey of consultants providing services to approximately 1,000 ESOPs, ESOP companies seem to be weathering the economic downturn relatively well. We asked several large ESOP providers to tell us how their clients have done in the last year. Weighting the responses by their number of clients, the following data resulted:
- Bankrupt or about to go bankrupt: 1.4%
- Laying off or planning to lay off 20% of more of workforce: 5.3%
- Breaking even: 17.1%
- Profitable, but no plans for hiring new people: 49.2%
- Profitable with plans for hiring new people: 26.9%
The survey was by no means comprehensive and relied on the estimates of providers, not company-by-company analyses. Given the large number of companies involved, however, it is probably reasonably representative of what is going on. Some of the providers, however, commented that they expected 2009 to be a tougher year. The NCEO will release the second round of data from ESOP companies about the impact of the credit crisis in late February.
Data on how well similar non-ESOP companies are not available.