Employee ownership
Employee ownership occurs when a corporation is owned in whole or in part by its employees. Employees are usually given a share of the corporation after a certain length of employment or they can buy shares at any time. A corporation owned entirely by its employees (such as a worker cooperative) will not, therefore, have its shares sold on public stock markets. Employee-owned corporations often adopt profit sharing where the profits of the corporation are shared with the employees. They also often have boards of directors elected directly by the employees. Some corporations make formal arrangements for employee participation, called Employee Stock Ownership Plans (ESOPs).
Employee ownership appears to increase production and profitability, and improve employees' dedication and sense of ownership. However, critics caution that democratic leadership can lead to slow decision-making, and employee stock ownership can increase employees' financial risk if the company does poorly. Notable employee-owned corporations include the John Lewis Partnership in the UK, and the US firm Tribune Company.
Most features of employee-owned corporations described in this article are not specific to any one nation. The information on taxation and stock trading refers to United States law and may differ elsewhere.
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