The potential benefits of employee equity funds in the United States

PurposeThe mainstream framework for corporate governance is that all corporate activity should be directed towards shareholder wealth maximization. This article posits that public policy should move away from shareholder primacy and instead recognize employees as key contributors to corporate value-creation. One way to implement this approach is to require the creation of Employee Equity Funds (EEFs) at large corporations, which would pay employees dividends alongside external shareholders and establish a collective employee voice in corporate governance. EEFs may reduce economic inequality while improving firm performance and macroeconomic stability. This article provides an original estimate of average employee dividends, illustrating the potential of employee equity funds.Design/methodology/approachAnalysis of employee dividends for Employee Equity Funds at large U.S. corporations, using publicly available corporate finance data.FindingsBased on historic dividend payments and employee counts in public 10-K filings, I find that, if EEFs held 20% of outstanding equity, the average employee dividend across this sample would be $2,622 per year, while the median is $1,760. This indicates that employee dividends can be a small but meaningful form of redressing wealth inequality for the low-wage workforce, though it should emphatically not be seen as a replacement for fair wages.Originality/valueOriginal data analysis of a proposed policy reform to increase the benefits of employee equity in the United States.

Outcomes of talent management: the role of perceived equity

PurposeTo date, the effects of two approaches – inclusive and exclusive – to talent management (TM) on employee outcomes are largely unexplored. This paper explores the role of perceived equity and theoretically examines the process through which these TM programs impact employee outcomes.Design/methodology/approachThis paper draws on the job demands-resources model and equity theory and proposes a typology of employee outcomes in the context of different approaches to TM.FindingsBased on the theoretical framework, the paper argues that in the context of both inclusive and exclusive TM, perceived equity is a valuable resource that motivates employees and results in favourable outcomes.Research limitations/implicationsFuture empirical studies should test the propositions put forth in this paper. The multilevel research design would allow for an in-depth analysis of organisational contexts, and qualitative studies using in-depth interviews can provide greater insights into employees' experiences and perspectives of TM programs.Practical implicationsThe paper presents implications for managers and human resource (HR) and TM professionals regarding how to get the most out of their TM programs. These implications are important since employee equity perceptions can influence the effectiveness of TM programs.Originality/valueIn this paper, the authors add to the literature by examining the role of employee equity perceptions in the context of inclusive and exclusive TM and to highlight how perceived (in)equity could lead to negative consequences, even among high potential (HiPo) employees.

The Costs of Owning Employer Stocks: Lessons from Taiwan

Using data on all employees at listed companies in Taiwan, we find that the bias toward employer stocks is generic to individual investor decision making, but not limited to retirement plans. Seventy-one percent of the sample employees invest in employer stocks and employer stocks make up on average 47% of employee equity portfolios. The underdiversification resulting from the bias toward employer stocks is very costly. Holding current portfolio risk constant, employees forego 4.89% per annum in raw returns by investing in employer stocks, which represents 39.74% of their average 1998 salary income. Our findings have important implications for social security reform and retirement account management.