Summary
More than eight million workers now participate in employee stock ownership plans (ESOPs) in approximately 8,100 companies. The tax incentives designed by Congress since 1974 partly explain the growth in the number of ESOP companies, but most ESOPs reflect the view that worker ownership and participation have real advantages. Over 73% of the ESOP companies significantly improved their performance after setting up their plans. Moreover, there is a strong correlation between corporate performance and worker participation: ESOP companies do best when they set up programs that permit workers to have a say in corporate policy. With ESOPs performing so well more American managers should consider adopting this approach.