---------- Forwarded message ---------- Date: Thu, 12 Nov 1998 13:16:48 +0100 GMT From: [EMAIL PROTECTED] To: [EMAIL PROTECTED] Subject: Employee Ownership Index beats Footsie Employee Ownership Index beats Footsie Workers are good for the share price of their company. The Employee Ownership Index (EOI) tracks companies with more than 10% of their issued share capital held by or for staff other than directors - and it has outperformed the FTSE All-Share index. If, for example, you had invested GBP 1,000 in the index at the beginning of 1992, your investment would be worth GBP 3,470 . If you had put the same amount in the Footsie, you would have got back GBP 1,940. EOI was launched in April 1997 - the first attempt to investigate the link between employee ownership and the company share price. Nigel Mason, managing director of Capital Strategies, the company behind the EOI, says: "The index is clear evidence that there is a correlation between employee ownership and corporate performance." But although the link appears strong, some argue that it is just one in a chain. The type and size of the company may have just as weighty an influence on its stock-market performance as its ownership structure. To qualify for inclusion in the index, ownership can take the form of a save-as-you-earn share-option scheme or even a single-company Pep - but all companies meet the 10% criteria. There are 36 companies in the EOI, including National Express and Beale, which owns department stores. The number of companies that are eligible for inclusion on the EOI fluctuates, but most are small or fledgling companies. A recent addition is ITnet, previously the information-technology- services arm of Cadbury Schweppes, which was subject to a management and staff buyout three years ago. Most of the 1,600 workers are shareholders. Management and staff are estimated to hold 34% of the company at a value of more than GBP 80m. Analysis of the EOI reveals that the index has beaten the Footsie in five of the past seven quarters. In the third quarter of 1997 it matched the Footsie, but in the second quarter of the same year the EOI fell by 2%, while the Footsie rose by 5%. Therefore some volatility can be expected. Mason welcomes the announcement by Gordon Brown, the chancellor, in his pre-budget statement to encourage staff share ownership with tax incentives. He says: "We have long argued the case for employee shareholders because of the positive effect on corporate performance. We hope the initiative will lead to broader-based share ownership in smaller quoted firms and in private companies. It can only have positive results for shareholders, companies and the economy." The EOI is updated and published quarterly by Capital Strategies. Call 0171-256 8000 Source: (c) Sunday Times, 08/11/1998
