Workshop Employee Financial Participation - O Kelly


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Workshop Employee Financial Participation - O Kelly

  1. 1. FINANCIAL PARTICIPATION - AN OVERVIEW Kevin P O’Kelly International Association for Financial Participation
  2. 2. A LONG HISTORY … US since 19th century (e.g. Proctor & Gamble since 1887) o Interest grow after 1930s depression (Rucker and Scanlon Plans) In Europe it is rooted in the economic democracy movements of the 1960s and 1970s. Supporting legislation - o France since 1950s o UK since 1978 o Belgium since 1983 o Denmark since 1958
  3. 3. FORMS OF FINANCIAL PARTICIPATION Profit-sharing Employee Share Ownership Plans Share based profit-sharing Share Purchase Plans Stock options
  4. 4. FINANCIAL PARTICIPATION AND THE EU PEPPER I (1991) and II (1996) Reports o Council Recommendation 1992 o Resolution of the European Parliament 1992 Commission Communiqué 2002 Report of the High Level Group 2004 European Foundation Benchmarking Study 2004 IAFP Model Plan 2005 PEPPER III (2006) and IV (2008) Reports
  5. 5. Promotion of Employee Participation in Profits and Enterprise Results
  6. 6. PEPPER Reports Expected to: Achieve a wider distribution of the wealth generated by the enterprise Encourage greater employee involvement in the enterprise Develop positive motivation and productivity by the workforce Enhance the competitiveness of the enterprise through wage flexibility Sustain jobs
  7. 7. Commission Communiqué 2002 Three key strands: General Principles Addressing transnational barriers The role of the European Commission
  8. 8. Commission Communiqué 2002 - General Principles Voluntary Broad-based Linked to enterprise results Continuity Transparency Risk awareness Distinct from normal remuneration Avoidance of barriers to mobility
  9. 9. Commission Communiqué 2002 - Transnational Barriers A lack of co-ordination of taxation policies Social security contributions - a lack of legal clarity Legal differences between Member States Cultural differences A lack of information
  10. 10. Commission Communiqué 2002 - Actions at EU-level A High-Level Expert Group Develop indicators for benchmarking
  11. 11. High Level Group Six Barriers: 1. Diversity of legal, fiscal and social frameworks 2. The variety of Stock Exchange rules 3. Definition of financial participation in legislation 4. Difference Corporate Governance traditions 5. Industrial relations traditions, cultures and practice 6. Cost of introduction
  12. 12. High Level Group Proposals to eliminate these barriers: Improve dialogue between Member States A greater role for the social partners Dissemination of ‘Good Practice’ examples Reduce the complexities of the share offer
  13. 13. High Level Group Introduce a ‘convention’ on the taxation of share options Introduce a procedure for the mutual recognition of other forms of financial participation A Model Plan for financial participation
  14. 14. Benchmarking Study Three dimensions: o Level of usage o Nature o National policies and characteristics Sixteen indicators: o Themes o Sub-themes Tested in Slovenia
  15. 15. Elements of a Model Plan General principles Governance and Fiduciary Responsibilities o Involvement of employees in key decision making o Independent fiduciary custodian o Independent valuation of employees’ shares o Duty of care by directors
  16. 16. Elements of a Model Plan Communications o Adequate information before a plan is introduced o Information annually when the plan is up and running o Information on implications for plan of company changes o Social dialogue at all stages - involvement of employee representatives o Language o Economic/financial literacy
  17. 17. Elements of a Model Plan Communications Strategy o Company wide o Two-way briefings o Sending documentation o Regular in-house bulletins o Help-line o Electronic communications
  18. 18. Elements of a Model Plan Detailed General Rules for the design of a Plan Detailed Rules for the different forms of Financial participation
  19. 19. PEPPER III and IV Cover all EU Member States, Croatia and Turkey Describes the legal environment The scope and nature of financial participation schemes Comparative analysis
  20. 20. RESEARCH Research projects have consistently shown that financial participation, together with other forms of employee involvement, has a positive influence on the economic performance of the enterprise, improves productivity, the general commitment of employees and trust between employees and management. Transfer, 1/2002
  21. 21. Thank you