Blackstone, a private equity firm, is offering equity to 18,000 employees of Copeland Corporation, a climate-technology company that Blackstone acquired a controlling interest in from Emerson Electric Co. The plan seems to include all of Copeland’s employees and Blackstone expects to expand equity sharing by offering equity-linked bonuses at more of their U.S. private equity control investments. This move is seen as a way to attract the best employees in a competitive market where the hunt for talent intensifies.
The strategy of offering equity participation and incentives for growth to employees gives more individuals a shot at the American dream. Equity sharing, especially through tools like ESOPs (employee stock option plans) that offer tax benefits, have been used by many companies since they were first introduced by Louis Kelso in 1956. This approach is considered as a form of capitalism for the masses and is encouraged by the government as a way to empower employees and align their interests with the success of the company.
When considering setting up an ESOP, entrepreneurs should address key issues such as exits for employees who own shares, financial education to help employees understand the value of the stock, following the Silicon Valley model of offering stock to attract and retain talented individuals, and creating customized incentive plans to motivate employees and increase the company’s net worth. Providing attractive incentive plans and profit-sharing options can help employees see immediate benefits from their hard work and encourage growth within the company.
In one example, Bob Kierlin offered shares of his company Fastenal to employees at a discounted price before the company went public, allowing smart employees to benefit as the company’s stock value increased. Other successful entrepreneurs, such as Bill Gates, have used employee stock option models to reward and motivate their workforce. Additionally, Glen Taylor, owner of Taylor Corporation, implemented attractive productivity-based incentive plans and profit-sharing options for managers to ensure continued growth and profitability within his companies.
Overall, the decision to offer equity to employees can be a strategic move for companies looking to attract and retain top talent, align employee interests with company success, and provide opportunities for employees to share in the growth and success of the organization. By addressing key considerations such as exits, financial education, following industry models, and creating customized incentive plans, entrepreneurs can effectively implement equity sharing programs that benefit both employees and the company as a whole.
