(BFM Bourse) – Widespread in large companies, employee share ownership is still underdeveloped in small and medium-sized listed companies. However, by involving their employees in their capital, companies have everything to gain.
Initiated by Charles de Gaulle, employee share ownership still has the wind in its sails. It now concerns nearly 3 million employees in France, mainly in large companies, according to the 2022 barometer of Equalis Capital.
Recently, Veolia employees became the first shareholder of the utility giant following an employee shareholding operation. The new Suez group, born after Veolia’s takeover bid on its competitor with non-guarded activities, is aiming for 10% employee shareholding “within 5 to 7 years”, according to its commitments at the end of 2021.
Renault employees also like to drive for their company. Renaulution Shareplan, the Diamond brand’s employee shareholding plan, has recently met with great success. At the end of the operation next February, the employees will hold approximately 4.7% of the capital at the end of the operation. Like the specialist in collective services, Renault hopes to reach the objective of 10% employee shareholders by 2030.
Moreover, employee savings plans in large listed groups reached a record level in 2021. Employees of the main French companies listed on the stock market believe in the prospects of their company, and have invested an average of 5,600 euros per person. (including contribution) to the capital of their own company during the employee shareholding operations which took place in the 2021 financial year, then reported the latest report from the Eres firm. We will have to wait until spring 2023 to know the trend of 2022 in this area.
To encourage their employees to take stakes in their capital, companies generally have several levers at their disposal. including two main ones. First the discount which guarantees the employee a rebate on the price of the shares. Employees have the option of subscribing at a discount on the share price of up to 30%, or even 40% in the event that the shares are unavailable for 10 years. Then, the allocation of free shares. It is subject to an incompressible allocation and retention period of a total of two years. The limit of free share allocations of 10% of the capital can be significantly increased in the event that the allocations concern all employees.
“And in both cases, it is preferable to hold these shares via a PEE (company savings plan), which offers significant advantages (in particular tax advantages with the reduction to 10% of the social package, the possibility of unilateral payment of the ’employer)” explains Nisa Benaddi, partner at EuroLand Corporate.
Additional liquidity
The implementation of an employee shareholding plan makes it possible to involve employees in the life of their company. But this device is not exclusive to large companies. Small and medium-sized entities can also involve their employees in their development project. The Pacte law of 2019 also reinforces the attractiveness of employee share ownership for this type of company, especially for those operating on the financial markets.
Listing on the Stock Exchange provides employees of small and medium-sized businesses with additional liquidity, with “the satisfaction of selling shares at a price reflecting the performance of the company to which they have contributed” recalls Nisa Benaddi. “An economic performance, which according to many studies, is superior over time, when employees are involved in the capital” she adds.
The specialist illustrates this relationship performance / employee involvement in capital with the example of Visativ, the specialist in digital transformation and innovation for SMEs and ETIs, listed on the stock exchange since 2014. The group based not far from Lyon has for several years placed the sharing of value with its employees at the heart of its overall development strategy.
The latest employee share ownership plan enabled 66% of eligible employees to become Visiativ shareholders, enabling them to hold nearly 2% of the capital, with a 30% discount. And the employees made a good deal, recalls Nisa Benaddi, because to date they have realized a latent capital gain of 33% compared to the plan implemented in April 2022.
Visiativ still remains an exception in the universe of small and medium-sized enterprises and mid-cap companies, even if their number has doubled since 2015. The Pacte Law aims for a target of 10% of the capital of French companies held by employees by 2030.
“Employee share ownership is a tremendous lever, for listed small & mid caps that bring together founders, managers and employees on a long-term basis, to create transparent value geared towards the success and social responsibility of the company” concludes Nisa Benaddi.
Sabrina Sadgui – ©2023 BFM Bourse