Ownership Works: A New Nonprofit Supporting Employee Ownership

Ownership Works is a new nonprofit funded by $50 million in donations from Pete Stavros, a partner at the investment firm KKR, and 60 other organizations. In an April 5 story on the launch, the Wall Street Journal reported that “among the founding partners are 19 private-equity firms, including Apollo Global Management Inc., Ares Management Corp., KKR & Co., Leonard Green & Partners LP, Silver Lake, TPG Inc., and Warburg Pincus LLC.” Others involved include United for Respect, which has led worker campaigns against private-equity-backed companies, Omidyar Network, and the Ford Foundation.

Stavros first learned about employee ownership in the 1990s when he was getting his MBA and contacted the NCEO. At KKR, he was eventually able to put that interest to work as head of the industrials group, where he engineered several purchases of companies and provided employees with equity grants as part of the deal. The companies also worked to create management styles that created more opportunities for employee involvement in work-level decisions. Employees have ended up with tens of thousands of dollars or more when KKR sold these companies or took them public.

Thirty-seven private equity firms have signed on the Ownership Works model, which requires each firm do at least three deals per year that provide broad-based equity grants equal to at least six months of pay or 20% of the total equity going to key employees, whichever is higher. The organization will also work to publicize the idea of employee ownership and promote legislative and regulatory changes to help the idea move forward. Ownership Works will also work on promoting this model for public companies.

The NCEO is exploring ways for the two organizations to partner. We see this new effort as potentially making a significant difference in the way employee ownership is viewed not only by private equity firms but other companies as well that would not otherwise have considered employee ownership.