Co-operatives and executive pay

Ed Mayo's Blog

There have been debates on how much to pay managers and wider staff in the co-operative sector right from the early days.

As perhaps with any issue of economic fairness, there have tended to be two schools of thought. The first is that there might be a universal standard of fairness, that a co-operative can embrace. The second is that what matters is ‘process fairness’, in which executive pay is considered openly and appropriately by members, reflecting the democratic governance model of member-owned coops.

An example of a universal approach may be, for example, that you get out what you put in. The training co-op Zebra Collective has a flat management and pay structure, and pay is decided according to how much training and how much administration staff members do. Or it may be an egalitarian principle of equal pay. At SUMA, the wholefood co-operative, all staff are paid an…

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Administration Again Takes Aim at Employee Ownership

The ESOP Association Blog

The ESOP Association released the following press release today.

For Immediate Release: March 4, 2014

For More Information: Amy Gwiazdowski, amy AT esopassociation.org

Administration Again Takes Aim at Employee Ownership

March 4, 2014 (Washington, DC) – Today, The ESOP Association expressed disappointment once more over a provision in the President’s Fiscal Year 2015 budget that pertains to employee stock ownership plans (ESOPs). Included in the budget document is a provision to ‘eliminate the deduction for dividends on stock of publicly-traded corporations held in certain ESOPs.’

“Obviously, we are disappointed this provision has been included in the President’s budget,” said ESOP Association President, J. Michael Keeling. “We are baffled by the Administration. How can the Administration preach about creating jobs and then plan to take away a proven policy that sustains jobs? Furthermore, the provision the Administration wants to kill was added in 1984 by Congress to address income inequality by…

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Leading in an Ownership Setting: The Program for CEOs — 2014 Sessions Announced

The ESOP Association Blog

Foundation

The Employee Ownership Foundation and the University of Pennsylvania’s School of Social Policy and Practice offer CEOs/Presidents and/or the CEO/President designee, of ESOP companies a breakthrough Certificate Program — Leading in an Ownership Setting: The Program for CEOs.More information about the program here.

This ESOP Leadership program is focused on enhancing each participant’s leadership effectiveness in his or her own company.

Session Dates:

Session I: June 15 – 20, 2014

Session II: October 19 – 22, 2014

Gettysburg Tour: June 21, 2014 (Optional Leadership Lessons Tour at Gettysburg)

Tuition:

$11,000 (ESOP Association Members); $13,000 (Non-Members)

The program will cover the following topics:

  • Essential factors for effectively leading an ESOP company
  • Leadership challenges & opportunities unique to ESOPs
  • Link of ownership culture to ESOP company performance
  • The leader’s role in promoting employee engagement
  • Reflection on your personal strengths and challenges as a leader
  • Connecting your values and beliefs with…

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#ESOaction14 Conference Summary

The conference “Taking Action: Promotion of Employee Share Ownership” on Thursday 30 Jan 2014 in Brussels gathered high level representatives of all relevant stakeholders in EU policy-making to discuss options to promote Employee Share Ownership (ESO) in Europe. In line with the Commission’s initiative as well as the European Parliament’s resolution of 15 January 2014, the following five priorities broadly shared by the participants can be summarised from the discussions:

1. Establishing a Legal Framework on ESO 

We should work to create an optional legal framework at the EU level that in particular would fa-cilitate cross-border ESO schemes. An EU framework is needed to establish a level playing field that would especially create opportunities for SMEs which are most affected by the consequences of the financial crisis. SMEs should receive more policy support, in particular considering the signifi-cant unexploited potential for ESO. In this context establishing a so-called 29th regime on Employee Financial Participation (EFP) appears a promising option. Hence, it seems justified that the Pilot Project should include a preliminary impact assessment of such a regime.

2. Promoting the exchange of best practice 

In order to establish a functioning exchange of best practice, systematic processing and editing of information is very important. Rather than producing “another study for the shelf”, we should look into the creation of one-stop shops. A “Virtual Centre for EFP” (as presented during the confer-ence) could be a first step in that direction.

3. Providing transparency with regard to fiscal treatment and tax incentives 

Tax incentives are not a prerequisite for successful implementation of ESO, but they do effectively promote such schemes. Therefore, while harmonisation is not a condition, transparency with re-gard to the different national fiscal treatment of ESO is key. In particular, an Effective Tax Rate Cal-culator (as presented during the conference) could provide a useful decision-making tool for com-panies with cross-border activities that plan to introduce EFP schemes.

4. Combining economic and labour market policies and reducing inequality 

ESO fits logically into the EU’s multi-dimensional approach of combing economic and labour mar-ket policies. ESO schemes may help to create and secure jobs, reactivate unemployed and facilitate business succession in SMEs. In order to establish equality of arms, we should develop recommen-dations at EU level for fiscal and other incentives for SMEs interested in implementing ESO schemes. In this respect, investigating and promoting the transferability of best practice ESO schemes like the Sociedades Laborales and Employee Stock Ownership Plans (ESOPs) is important.

5. Incorporating ESO into Corporate Governance and Long-Term Investment strategies 

Turning workers into shareholders of their employer company helps to improve corporate govern-ance by promoting transparency, sustainability and responsibility in corporate decision-making, which is one of the main objectives of the EU’s corporate governance policy. Therefore, integrating ESO into this policy should be strongly considered. Further, as ESO can foster growth of SMEs and facilitate business succession, financing ESO schemes should become one of the objectives of the Commission’s Long-Term Investment strategy. In particular it should be considered to integrate ESO in the EIB products for SME financing and incorporate ESO into the Commission’s proposal for the regulation on European Long-Term Investment Funds (ELTIFs).

In order to achieve these aims, social partners and all other relevant stakeholders should be closely involved in the process. Further, any promotion of ESO should respect the relevant fundamental princi-ples as identified by the 1992 Commission Recommendation on EFP and reiterated in the EP Own-Initiative Report of 15 January 2014. After many years of research and fruitful discussion the time has come for concrete actions: Let’s make ESO a positive priority in Europe!

all conference materials are available for download via our Intercentar Website

conference pictures can be found on Facebook

Governance in co-operatives

Ed Mayo's Blog

The vocabulary of organisations, in books, business schools and workplaces, tends to be a language of hierarchy. Governance then refers to the direction of a business – the ultimate ‘buck stops here’. A different model is to understand governance in ecological terms, as a system of feedback, which allows businesses to correct course where needed. 

Whichever one you prefer, good governance has to combine the qualities of direction and of listening.

The weakness of vertical hierarchies for example is that information becomes filtered and more removed from reality the higher it gets. The executive directors see it from their vantage point in the business. The non-executives are independent, but, removed from the running of the business, often also unaware. The weakness of horizontal collectives can be a tendency to information overload, restricting action when it is simplicity rather than complexity that is needed. 

The governance of co-operatives and mutuals is fascinating because across our different forms of…

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ESOP Association Members Make Fortune’s 2014 100 Best Companies to Work For

The ESOP Association Blog

Congratulations go out to four members of The ESOP Association that have been named to Fortune’s list of the 100 best Companies to Work For.

Burns & McDonnell Engineers-Architects, Kansas City, MO

W. L. Gore & Associates, Inc., Newark, DE

Publix Super Markets, Inc., Lakeland, FL

TDIndustries, Inc., Dallas, TX

“Congratulations to our members,” said ESOP Association President, J. Michael Keeling. “Employees with employee stock ownership, including those with ESOPs, in general, have more sustainable employment. Our national leaders need to take note and understand that we need national policies to encourage employee stock ownership among working Americans. It’s the best jobs policy we have.”

To view the complete list, click here.

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CSOP – financing decentralized energy production by capital participation of consumers

Article by: Katarzyna Goebel – Europa Universität Viadrina

The public acceptance of renewable energies is crucial to achieve ambitious political goals of increasing the share of renewable energy production, to challenge the problem of climate change, improve energy efficiency and ensure its sustainability. But why should we accept another wind turbine disturbing the view from our windows, when we get nothing out of it? How many of us can afford financial participation in energy projects, as most of the capital is accumulated by a minority? Does it mean we should be excluded from the process? Not necessarily…

An instrument that enables consumers to become the co-owners of the good they consume without own financial contribution is the so-called Consumer Stock Ownership Plan (CSOP). It was created in 1960s by American attorney and investment banker Louis O. Kelso, among other tools for citizens’ financial participation without own capital.

The first and, so far, the only implemented CSOP project was in the year 1958 in Fresno California. The local farmers- the main consumers of a fertilizer- became in the framework of CSOP owners of the fertilizer producer “Valley Nitrogen Producers Inc.”[1] The venture turned out to be so successful that the competitors (big oil companies) had blocked its further development. Read More…

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