A COMPARATIVE SfTOf OF THE SXFBBXEBCSS OF BOTH

COMPANIES A » UKIOUS WITH STOCK OW8ERSHXP

PLAiS FOB EMPLOYEES

APPROVED)

Ma jor Professo!*

Ulnar Trot mam?

itoan of th« School; of Bosin«s« Administration

^ . t r - ^

duttt SAool

A COMPARATIVE STUM OF THB SXPERIEHC&S OP BOTH

COiPAMIES AMD IMXOffS WIS SfOCI OBHZfGSSX?

PLAK3 908 EMPLOTKIvS

TfiESIS

Presented to the Graduate Counoll of the

Vorth Texas State College in Partiel

Fulfillment of the Requirements

For the Degree of

MASTER OF 8USI8ESS AMIHIS1?RATI0If

by

frank V. MeClaln, B. A*

Texarkana, fexas

January, 1954

TABLE OP COHTEMTS

Pag© LIST OF TABLES It

Chapter 1, IHTRGDUCTIOS 1

The Problem and Its Importance Purpose of the Study Scop® of the Study Definition of Terms Methods of Research and Sources of Data Order of Presentation of Study

XI* TTPISS OP STOCK CW1ERSHIP PLAVS 12

Stoek Purchase Plans Stock Option Plans Stoek Bonus Plans Savings Mid Investment Plan®

III. PRKSSIfAT IOH OP FIMDIJTOS FBflK QUESTIOHHAIHES TO COHPASIES JWO URI08S 22

Analysis of Findings from Questionnaires to Companies

Analysis of Pindii^a from Questionnaires to Unions

General Analysis of Findings from Both Companies and Unions

IV. SUMIABY AMD CONCLUSIONS 47

SmaMfii'y Conclusions

APPKKDIX A $$

APPEHDIX B 60

APPBBDIX C 62

BXBLIOQBAFHT 63

ill

LIST OF TABLES

Table Fag#

1« Type of Plan, Employee Eligibility Requirements, Degree of Parti clpat i an, and Related Features of Plsns Offered by Responding Companies . . . 2l±

Z* Company Opinion Concerning Effects of Stock Ownership on Employees 2?

3. Responses by Companies Concerning Relationships with Onions in Regard to Stock Ownership Flans for Employees • 30

4* Same Attitudes and Opinions of Unions Concerning Stock Ownership Plans for Employees 37

5* Union Relationships with Companies in negotiating, Setting Up* and Administering Stock Omership Plans for Kaployees . Ip.

6, Comparison of Actual Union Attitude Toward Stock Ownership Flans with Company Appraisal of Union Attitude

?. Comparison of Answers Concerning Hegotist!on and the Setting Up of Stock Ownership Flans Between Companies and Unions i§4

8. Comparison of Opinions from Companies and Unions on the Effects of Stock Ownership Plans on Reduction of Turnover Rates and Increased Production 46

iv

CHAPTER X

IHTRODUCTIOH

The Problem and Its Importance

fhls study Is concerned with the »xp«rUnM« of both

management and unions with, stock ownership plans for em-

ployees*

Interest la plans to encourage the sale of a company * s

securities to its rank-and-file employees lias been stimu-

lated by the long and steady rise la the market value of

many stocks during the years since World War II.

Employee stock purchase plans attained widespread

popularity in the twenties* but with the crash of the stock

market and the rapid decline in the value of stocks many

employees found themselves not only out of a job but also

with stock valued at less than had been their obligation

for it.

With this experience fresh in the minis of company

executives, very few stock ownership plans for employees

were made available until the end of World War II. At

this time the nation entered an inflationary spiral. Prices

rose sharply as production lagged behind the terrlflo de*

sand.

At the aane tlise that the inflatl oaary spiral began to

est tap itvingt} many of the war»tl«#, patriotic United

States Government Savings Bonds Plana were abandoned because

they tso longer held the patriotic incentive that they did

during war time.

Baoauaa of the splrallng price*, employees In industry

lost faith in soy aort of an attsopt to save* Sine a there

m « no longer any patriotic obligation, thay fait they

shorald Invest their money In auoh a wmanmr that It would

grow aa the prloaa did.

la many parts of the world, particularly In Burope and

Asia, nations were rapidly drifting toward socialism.

Socialism, with its governntent-omed industries, could ef-

fectively eoab&t the Using prloaa of inflation, m ®

aoolallstle controls of the war threatened again to ahaekla

industry In this country.

The laadara of American industry fait tout thay must

do something. On© important result was the fringe-benefit

plana atoieh came into more general usage. Among these «ere

stock ownership plana for employees «faloh wara put into being

by a Halted amber of oampanlea. Theae plana did not ease

M * m m g o o d" w 1 1 1 8®«ture offered by management with th#

intent of splitting the profits of a very prosperous period

with labor, but rather as an atteupt to combat socialism and

rising prlaea, and at the same tlae offer & fringe benefit

plan to odspugr employees* "The principal reasons *by

companlea have instituted employee stock owership plane

are a desire (1) to make employees partners in the business,

so they will have greater interest in and devotion to the

oo^nqr; (2) to promote employee thrift} (3) to ©ducat©

the workers on the advantages of the free enterprise ayatsn;

<4) to provide a hedge against inflation) and (5) to obtain

working capital for tha ccagjany."1

*he long and steady riaa in tha priea of Most atook

vfcetted the appatitaa of many workers to own some of their

company's stook. Some types ©f stock ownership plans even

of far cartain tax advantages. Under tha provisions of tha

Internal Revsnue Coda abloh rafara to raatrictad stock

optioof^ a tax ia not Imposed A«n tha option la exercised,

but only when the stock la disposed. Moreover* thaaa gwtny

are taxed aa long-term capital gains, and not aa personal

incase. Usually thia la an insignificant amount of tax

when applied to moat employees, but it la a tax advantage

offered the cnployee by the Stock Option plan.^

Stock Option plana were originated to provide a method

stoereby executives would have a means of obtaining &mapany

stock* but have now been expanded to cover all the anqrtoyeea

Rational Industrial Conference Board- stock ©Merahio Studies in Personnel Poll^f^o.^IS, ®

2iiLl4-. P. 42.

la acne companies. These and other types ®f stock owner-

ship picas will bo explained in detail la the seooad chapter.

-Host &es do aot offer any sort of fomal stoek

ovmnblp plans far their employees* la mm.f easee th®

«ployee may wonder «fcy the company does not encourage him

to buy at oak* &mm companies h»*t gone to considerable

expeaae to explain to workers why management does aot think

such a plan la feasible. A number of articles have appeared

la wagasiaea explaining corapanj viewpoints.

fh® reasons usually given by management for aot offer-

lag stock la some sort of fonaal stock ownership plan are

the unfortunate experiences of employees with such plans la

th® depressloa of ths thirties, as swatlened pmieuily,

A number of oonpaalss try to aake it known to their

employees that stoek is available to those 4%o went to pur-

chase it, even though the company does aot offer any sort

of formal plan, la aany eases* p«aphlet«, ertleles la eom-

P«ay papers, and bulletin notices sake it clear that steek

is available through the same channels for employees as for

aay other stockholders on the market, These companies evi-

dently do aot feel it neoessary to encourage their workers

to buy eoapaay stoek.3

Itaployees, represented by unions, may be expected to

have certain reservations with regard to stock ownership

3Ibld.. p. 1*0.

since many of them held stook dtalog the depression. A re-

currence of losses such as those experienced with suoh plans

earlier may haw lass basis now* however* It now appears

that; business has reached a greater Maturity than Is, th©

days of the wild stock fluctuations before the Groat Do*

pression. fiie volume of stook is great©!* and more widely

hold, and tho Securities and Exchange Commission, acting as

a sort of umpire, has a restraining effect. It is a matter

of record fclmt there are fever lew York Stook Exchange House

failures than there are failures among banks.

It Is a source of real wonder that the movement to en*

courage workers to become oners of stook and thus become

the fiscal partners of management has been so slow in start-

ing and that we® today it receives such slender Impetus.^

As yet, American workers do not make up a very aiseable

group of shareholders vhsn compared in numbers with some

other groups. The proportions in which different groups of

people own shares in corporations, by numbers of people

and not by emount of stoek, are illustrated by the follow*,

ing infoiuat i on taken from a survey made by the Brookings

Institute in 1 <j$2t

Housewives hold the largest personally held * **?L5 ? ™ - 8 group is 32.6^ of all the individuals who own shares. Second is "middle

Bixoo. "»• Wortcwr .a • Fl,o.l Partner in In-duatry." a M W M a t B.vlaw. XLX (January, 1952), 53-Sj.

aaaaganant." operating supervisory o f f i c i a l s . assies up 9 * ^ of a l l Individual shareholders. fhs third group i s o lsr ios l and kindred workers with

Fourth id tlx* non-employed, daptadmt group *&th d»6£« Fifth are the ski l led workers, foremen, • to . with 6.39b* Sixth place i s held by profsssional people in the personal ssrri©* f i s l d s with 5,7% of th» total* Seventh place goes to the fanasrs «ho make up 4«9Jt of ths eharsholdere. Eighth place i s « t i s . Both ths professional people in technical f i s l d s sad the Administrative executives make up of ths total number of shareholders

American workers can b* a major souro© of funds for

capital investment, and they may bosons one of the largsst

st©ck~o«ni&g groups in days to com®, even though they now d o op « too s i s s sb l s f ezes . This i s i l lustratsd

by ths following quotation fro* an artiole appearing in

X&S t 9 W 4 « ; mi i H l H « W OhiMBl.1..

Siaple artthaiatls can show the relationship be* t * f # a e®pley«® purchasing powsr and ths raarket valu-atie® of a eoapany'a equity—asume a company with » * o l m m » a #25.000,000 payroll, and

valuation of ema&zi itook* i n suaha ease, • 12$ a month contribution by of

averaging #3,000 a year would bring frt ^ * ysar into ths market for the stook, or 3&S?2 t 2 * • 2,000,000

** b®«p®» possibls to visualize r i e a L S d f h f a corporate wealth on

J?1 d v**f* o f ths so-called l iberals , experience of aosse ©f our- largsst

ssrSMSfSi^iST* irMr*indiMt<>s -«W«*ias» of stock and other fringe-benefit pleas

thus seen generally advantageous to ths worker, but hs may

J" How Much Stock Do Workers 0«n" Factors Manaaaaent an c * (Ssptsabsr, 1952}, 306«»fo|. ISSS&SML. £&

^Louia Stims, "Employee Stook Purchase Plena«" "Tha c#»«. owav

be «id auaplcioua. I f he I s a wl<» swober, ha b M

M M M s union fight the acatpany »*ny tia»a in order to win

other b e n e f i t s .

fh© r e l a t i o n s h i p s b e t w t a union and man&gaiseat may N M I B pregnant with dietruat for •«ajr years* In these i n s tances the union will o f t e n t r y to »aa ovary poeaible da viae to eauat the Individual loyalty of t h e worker t o the union end to alienate I t from the management. It w i l l ba d i s t r u s t f u l of the human-iatie personnel p r a c t i c e s introduced by management to woo ita employeea.7

Some unions say f e a r a los# of t h e i r bargaining power if

t h e i r membership should became more management minded

through the ownership of atook.

American labor la mora tightly and more widely organized

today than before the 1929 atoeic market c rash . Companies

*uet hava at laaat partial union eonaant if p o l l e l a s and

p M g w a i a r e to succeed. It »ema reasonable to aaaume

that without union approval the atook ownership plana

offarod by companies may not find too groat a raaponaa

among tha American workers.

Growing union ambition and influence a re Ind ica ted by

the fo l lowing a t a t enan t by a recognized authority on l a b o r -

management r e l a t i o n a l

Between the point where business managers r e t a i n the unchallenged exe rc i se of a p a r t i c u l a r f u n c t i o n and t he point where the union auoeaeda in subjecting t h a t f u n c t i o n to Joint po l icy determination la uaua l ly an l n t e m e d i a t e stage, in uhlch the union employs ita

? J o h a *• Wif f t*«r # Supgrvialon j £ Personnel , p . 375.

8

privilege of oritically examining managerial methods and determinations. Xt la this ataga *hleh seeras to characterise the relatlouahlpa of mrnirngmmt and labor to a Urgs extent at tho present time. Insofar ae there la union dtiMtliftekiOB with management's dis-charge of its functions, it may be expected that libor officials and representatives alll seek to secure a role* in the determination of bmslness standards and policies, that it mmj bo brought la lino aith ita «b-j«8tiT*»i whatever th© latter may be. Monwvwi there la every reason to conclude that at least in certain instances participation In general policy fomatlon la itaalf a union objective, sought not only for the con-crete results expected from it but also booauae this participation ia conceived as a® important elenant of 'Induatrlal Dasioeraey,*®

Purpose of the Studjr

^h« purpose of this study la to gain answers and opinions

fvm both companies offering stook ownership plana for their

eaployeea and from unions who participate or hair© members

that partlolpata in plana. In order to obtain answers frost

both companies and unions ©teaming plana* thla study do-

sail baa broadly tha typaa of plana that ara now la exlatenoe,

An attempt was made to determine the moat popular features

of stock plana fro® both company and union viewpoint, wt

possible, to gain recommendations loading to tha fomti-

lation of more effielsnt and more popular plana*

3eope of tha Stuty

Stock ownership plans do not yet enjoy th# widespread

popularity they did in the twenties. Th® Vatlonal Industrial

S s t o s £ " . W 5 . C h ™ b " l * l n ' m SBiaa'aaUaaas £a • " r n r m t

Conference Board found only sixty~eight formal plans for

selling stock to employees la 19$3« Of this number twenty*

sight are no* active; thirty are inactive, with plans

oloe®d for further subserlptlODSJ and ton have been di«-

continued.9 This study ineludeo twenty large eempenles

fre® among twenty-eight offering plans, fhe Identity

of others m a not readily available.

»ds study la not an attempt to eelgi the advantages

and disadvantages of the various types of atoek ownership

plans for employees* of ateloh there are many, nor Is this

an intensive survey of companies and unions having Interest

In this subject. Bather, It la an attempt to determine

management and union experience wlfch plans of this type In

twenty well-known eampanlea, and to obtain general ^pinions

from both groups regarding the effeetlvenees of such plans.

Definition of few®

llfigll ownership plana.--Pogwal plana offered

by eampanlea that include seme type of atoek ownership pro-

visions for all or a substantial part of the working force

and that have a definitely formulated polloy regarding the

sal® or ownership of atoek.10 Other tenia used in this

National Industrial Conference Board, stock Ownership Studies in Personnel Policy Mo. ifS,

I0Ibld.. p. 8.

10

itudy will be a«lf ej^lanatory* or their masking will It*

wade eUcar in the context.

Methods of Research and Sources of Data

Extensive reaearoh in the library at North Texas State

doling® m a eftrrled out, The n&aes of as many aa possible

of the oaspanies waking uae of stock ownership plana for

employees were found in various periodicals and in two re-

ports published by the National Industrial Conforanea Board,

these reports ar® Steek Omerafttlp Plana for Workers ant

Saz&asB saS xnmfrw°* £laaa iac BaslaxaaM-

Questionnaires war# sent to twenty eavaniea» and each

w « to aand a prospectus of its plan if available.

Addresses of the companies and nemes of their executives

were obtained fro® Standard and Poor*a Directory f gxeoutlwea.

A Hat of unions with addresses and names of sqi« of

their offielala was found i» i»>bor £| Post War America by *ppppipa§|«i*. Wr

Colston 1. Warne, et al. fhoae unions that appeared to have

connection with the coapanles having ©took ownership plana

•ere the target for another questionnaire. Forty question*

nairea were sent to unions.11

Order of Freaentat ion of Study

It has been the purpoa® of the first chapter to intro-

duce the problem of atook ownership plana for employees and

_ ^^Questionnaires to both ooqaanlea and unions will be found in the Appendix.

11

to tell a little about the background of the plana. An

Attmkpt has been mad© to state th© purpose of th© study,

to show ita importanc©, and to indl eata Its aoopt* The

aethoda of raaearch ©*ploy©d hare been daseribed.

In tha aeaend chapter the nain types of ©took owner-

ship plana Tor asiployeaa ar© examined, with sxasples of

©&©h type presented: (1) ©took purehas©, (2) atoak option,

(3) stock bonus, and (if) sairinga and inraatettt plana.

fhla ©bapfear provides a basis for tha f emulation of ldaas

that were inoerporated into th© Qu©«ti«»ialr©a.

Hiapter III will show th« reeolta of th© question-

naires directed to th© canpanie© and th© qaaafelmm! w>^

diraotad to the unions. Certain relationships between

companies, vrnions, and plana All b® pointed out if suish

relationships ar© revealed.

Chapter IV All present certain conclusions and stake

recommendations that ar« juatiflad fr« tha findings of the

entire study.

CH&PfBl II

FTWM OP STOCK WMMMIF PLAMB

this study will not attempt to Make an examination of

th# various types of stock ownership plans for employees in

any extensive maimer, the purpose of this investigation is

to learn experiences and to gain opinions tram companies

and unions involved as to the sueoesa of auch plans from

thsir rsapective points of vls«, and to attanpt to slngls

out any features Aleh seen to bs of key importance to their

success.

In order to understand the reactions and answers of

tlwi companies and unions, it will bs necessary to classify

and define the main typos of plans. If there are m y re-

lationships between typss of plans and answers* they «tn

be brought out.

Far the purpose of this study, the writer Mil attempt

to elassify stook omerahip plena as offered by variens

oompaniea into four main typss. These are (1) stook

chase, (2) stock option, <3) stook bonus, and (4) savings

and investment plans.

There are other plans in existence, snob ss profit-

sharing plans involving part of the profits distributed

12

13

among the employees in the form of stock* lwp-«w plans,

whereby workers can buy stock lift after stockholders have

exercised their sights; stock purchased through a bank; and

others. 2a all outs, however, the plana are merely vari-

ations of ono of the four typos described.

Because of the fact that no two plans are alike and

also that many plana are mixtures of ®ore than into type,

it is difficult to give a pure example of *m« typos.

This study sill attempt to toll briefly whet is meant fey

a pure type and than giv« an example that will as nearly

as possible fit the classification* This information, for

the most part, eases to the writer in the fons of prospectus

reports from the various companies that responded to the

writer's revest for the reports.

Stock Purchase Plans

A substantial number of plans received in connection

with this study are true stock purchase plans, fader the

terms of a true stock purchase plan the worker is given

the opportunity to purchase stock of the employing company,

usually at a priee set in the plan. Sometimes companies

offer this stook at below market price or else offer other

incentives to encourage worker participation in the plan.

She employer provides the stook and permits the worker to

pay for it through regular payroll deduction or by other

methods, fthen the employee has completed M s purchase, the

llf

stock as a rule beocaes M a property, and he i# at liberty %

to dispose of It «heno*er he wishes.

Kxaaple of Stock Purchase Pleat The Scott Paper

Company Employees' Stock Purchase Plan

Any eaployee who works for the Seott Peper Company or

any of' Its isholly-owned subsidiaries is eligible for member-

ship in the employee stoek purchase plan. Membership is

entirely voluntary.

Subscriptions to purchase stoek «ay be wide by any

eligible saployee for sn amount up to the multiple of

fifty eents nearest ten per cent of the subscriber* s weekly

earnings. The coopaay will also oontribute a sua of

twenty per eent of the employee's deposits not in exoess

of thirty dollars a week end tea per eent of the portion

thereof in exoess of that amount* (Shis is an incentive

feature.)

The purpose of this plan is to sake available an

arrangement through ssfaich employees may purchase common

share 3 of the company out of their current earnings

assisted by contributions from the company in order to

encourage thrift and enable the employees to acquire a

financial interest in the earapany.

^national Industrial Conference Board, Stock Owner-ship Plans for Workers. Report I©. 132, P« 8.

15

The Seott Paper Caatpany plan In la operation fop a

set and definite period of tint# (forty-few© consecutive

weeks). this Is knowi toy all participant*• The plan will

be liquidated as soon at possible after the forty-two

m«k«* period is Beeh participant receive* the share*

of stoek that he has purchased (with the aid of company

eontrfbiitloits). He will receive in cash the aaownt less

than the value of the next share over his total number of

shares purchased*

Any member who wishes to withdraw the money he has

deposited to the plan stay do so* Be is, however, charged

a withdrawal fee of 3 par cent if the plan is less than

half over. He is charged $ per cent if the plan is nors

than half over. Always the fee must be a minimum of one

dollar* Arrangements for the distribution of the money or

stock ar© provided In the event of termination of employment,

leave of absence, death, and other unusual circumstances•2

SteiflR flrtfcra ilm,

* Another fora ©f stoek omerahip, «hieh has been en-

couraged by federal tax legislation, is the stoek option

plan. In 1<£>0» an amendment was added to the Internal

Revenue Code which gave tax advantages to employees

£fl£ l^i|^lro8B«ottia. JanJary tj[' fj

l6

exercising & stook option* "Ender the provisions of the tot»

ft tax Is not Imposed *hen the option is exercised, but only

when the stoek Is disposed of* xortonr, these gains are

taxed as long*tans capital gains, and not as porsonal in-

3

ecsi«. This "restricted stoek option1* section of the In-

ternal Revenue Cod* was designed primarily for ttxaoatlvtti,

but: th® Idas baa been applied to seme extant to plana cover-

ing wag® earners.

The difference between stook purchase w d stoek option

is that under the stoek purchase plan, th© employe© siakea a

commitment to purchase stook at a given price, and liwedi-

ately begins to make regular contributions toward ita pay-

ment. Under the stook option plan, the individual is

offered a definite amount of stoek at a speeifled prioe but

fee la usually granted an extended period in which to take

up the offer. He is under no obligation to purchase the

securities unless it is to his advantsge.**

Example of a Stoek Option Plan: The Inland Steel Company Stoek Option Plan for Kutployees

j!B£gMa.~«fhe p«i"po»e of the Inland Steel Company

ployees* Stook Option Plan is to pemit all the employees of

the company with two years of service to acquire stock in

%atio»al Industrial Conference Board, Stock owaarahln p MnrfrMfff* Studies in Personnel Policy Ko. iW,

P. 8.

1?

the company. fh« United Mine Workers are excluded beeauso

the UnttmA Mine Workora «dfi««d th« Wtgt Stabiliutim

Board it did not desire audi mployeea to be iraelitded.

Bffeetlvs d&|& j£ fift pUm shall b*o«e

effective and the options shall be granted at firm o'clock

p.n. (Chleago tlw») on a date determined by the Board of

Director* of the oetapany. On the date the plan becomes

effective, the ecnpany shall file with the Plot National

Bank oX1 Chicago a ©opy of the plan and a cert if i ©at® of

the treasurer of the eaapany to evidence the granting of

the options on that date,

gflll 9l Piaa b«©«®a

effective each employee will be granted the option to pur-

chase stock amounting up to per cent of his wages (based

cm fee preceding year}*

Potion price. —-fh® pes* share option prioe shall be

P«r cent of the sale prioe of stook on the Sew York

Stook Exchange on the effective date of the plan*

M M JD&I f M t e total option

period is for throe years, The «sployees nay exercise

their options at any time and fresi time to tine, daring the

period oaaiaenclng one year after the date of the granting

of the option and ending three years after the date of the

granting of the option.

18

Payroll deductions. —'Slthla thirty days aftar th©

affactive data of tha plan, aaoh tligibl* oaployaa amy

mxmmit® and dalivar to th© company an authorization direct-

ing periodic payroll deduction#. Tb» plan also makes pro-

visions for tha handling of atook in ceae of death# terir.i-5

nation of vsplcgnMnt, and other unusual eases*

Wader th® Inland Steel Company Employees1 Stook Option

Plan tha eaployee ia given the option of

(a) buyiJig all or any part of the sharea to dblth he

la entitled* or

(b) withdrawing frc® th© plan, busying a took with any

part or all of M a savings «md intereat tip to th* tine ha

fitMmwi, and taking back any money not wad to boy stook.

Mook gmm Flans

Stook bonus plana ar® usually offered ia eooneetlon

with one of tha othar plana* auoh aa tha aavlnge and in-

veatwant plan, la th® oaaa of tha a took bonus, tha company

glvea «tock to tha employee in tha fom of an outright bonua.

Ordinarily this bonus ia givan to encourage savings among

enployeee. One example of thia la tha Qeaftral Kleetrlc

Employee Saving* and Stook Bonus Plan•

Lallan joas l a amlsms* Aissif2jrTm%Tp^£

19

Ksaspla of * 3took Booua Plant Otaii*l Klaotrla Jimployea Savings and Stoek Bonus Plan

Wm&wr tha Grwmml Electric plan tha employee, throu#t

regular payroll daduotiona ©ma gat aradit for up to &>2$

per year la Sariea E ftovamaant Savings Bonda. Ha umat

dapcait thaaa bonda for fiva yeara w&tiki the company In ordar

to receive M s bonus.

If tha employee dapoalta tte® bonda for tha fiw^yw

period, he r©e©iv«© M s bonds plu© a 15 par ©ant bonus in

General hlectric stock and thoir accumulated dividend a.

Yh© employe® c«n# of oouraa, withdraw thebonda any time,

hut if ha doaa before fiva yearn ara up ha loses hia bonus

righta*

Savings and Invaatmant Plana

tb« naweat type of stock ownarahip plan la the aavinga

and investment plan, These ara basoning more and snore popu-

lar, being us#d largely by oil companies at tha preaant.

fhia typa of plan has bean developed to eneourage amployaaa'

aavlaga and at tha aw# timm it has alaraanta of employee

stock ownership, There are aeveral variations of tha plan.

Under on©, tha atook la given aa a bonus to employees *feo

aava periodically. Under another, tha araployeaa* aavinga

®ay be invested in whole or in part in tha employer'a I -U^MHWHIMIW

^Coupon *E* Bonds," Baainaaa Waak (September 8, 1951)» 9d«

20

soourltios, In otfeors, ttio thrift plan Is an ovoivall

paoteago and the employ©© tea a ofcoleo as to th© mmtmmr in 7

*toioh M a savings Mil bo

Sjjaiaple of ft Savings and Inroatiaont Flam fhe SGBIO laployoos* Invsstosont Plan

It appears to the m l tar that th® plan offarad by tb*

Standard Oil Company of Ohio is one of the boat oxaaiploa

of & savings and investment plan* Under the SOHIO plan,

any regular assployo® *iio has two years' service and eon-

tributes to ttm eotapany retirement plan la eligible to

partlolpato la the savtngs and investment plan* % pay-

roll deductions tm employe© *a»gr allot either 3 par cant or

6 por ©exit of M a baa® pay to the plan if tho total does

not exceed sixty dollars a wonth.

fh* company also contributes to tho plan mi the fol-

lowing oasis;

If th© company earnings on Invested and borroieed

capital have boon loss than 6 par cant during tl* preceding

four quarters, no contribution will b© made for that

quarter. If earnings ha*« been 6 por cant but loaa

9 I>®2? cant* the contribution to e&eh employe©* s «@eo«nt

«tll bo one third of fch© account the employee has allotted

7 national Industrial Conference Board, Stock

Ssgf im. SMBaBI* Studios in Personnel FoliofTlo. 01; p. 10«

2%

daring the prtvioui quarter. If ttralngt baw been 9 P*r

cent but leas then 12 per cent, the company *111 contribute

one half of the amount the employee allotted* if,

during tho preceding four quarters* the company*e earning#

amounted to 12 per eent or more* two thlrde of the amount

the employee allotted during the paat quarter will be

added to each employee1® isocount.

Both the employee and th© company contri-

butions uro deposited with a bank. Fran there the employee

decides how he tad 11 invest the money* His choices are

(a) withdraw as oash

<b) invest in United States Government Savings Bonds*

Soriea E^twenty-flve-dollar daiaoBiinaticn

<c) SOHIO 3 3/4 P©* cent preferred stoek-~<Nae hundred

dollars par value

<d) SOHIO eoffloa stoefe—ten dollars par value

The employe© say mot invest mere than two thirds of

his entire account in SOHIO caaaon stock.

CHAPTBE 111

mmmfATion OF FIBPIHOS PRO* QOESTXOMiuxRfis

tO CQKPAH1ES A ® UHXGKS

The fonr prinoipal types of *%mk om«riblp plans a©*

in existence and an exespl© of each type were described to

the preceding chapter. The examples are not always pur®

ones because so auany of the plans embody features of more

than one type of plan.

twenty cpiestionnairee wmem sent to eoapaaies that

were known to have sea® fom of stock ownership plan for

aaplc^Mt* la eaeb MM TIN eoqptoiti were also asked for

a prospectus report ©©needing the plan used by the par-

ticular company.

Seventeen companies responded, In some oasos the

questionnaires ware only partially filled out, but sany

additional answers could be gained from the prospectus

reports.

Analysis of Findings trm Questionnaire to Companies

After receipt of the completed questionnaires, tables

were constructed Showing a majority of the answer in simple

tabular form. Some questions calling for opinions will be

22

given special treatment, and any noticeable relationships

nill be brought out, if possible.

Iherevsr possible, groups of qMiticos pertaining

to the mme general subjects are incorporated la the >«ai

table* Bmse questions answered by companies ar® related

to questions answered by unions* These will bo dealt

with separately.

Table 1 shows a breakdown by company of tbo type of

plan offered, the requirements for employees to participate

ill the pl«Af the percentage of eligible employee parti*

cipatlon, whether or not the plan offered provides safe-

guards to employees in event of a decline in tin# market

price of ©3t® stock of th© ecrapaiiy,, and the outlook of the

company &» far as th® growth of employee stock ownership

plans are ©unearned*

m e highest percentages of eligible employees belong

to those companies offering savings and investment plans*

It may also be noted that the majority of plans of this

type are found in oil companies*

Safeguards are incorporated into the savings and in-

vestment plans and this may be one reason for their greater

popularity among employees. So®# of the companies offer*

ing savings and investment plans offer the employee a

choice of withdrawing his money (paid into m e fund by

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26

pay roll deductions) in fche form of otih, pvKttAl bonds,

company cewaon or ompany preferred stoek.

The •••lags and inTt«tat«at plana also have a boots

feature incorporated into them. For every dollar the em-

ployee pays into the fund the eoiapany will usually make a

contribution (of varying degrees) as a bonus to the employee

for M s savings* It will bo rioted in Table 1 that many of

the eoipsMfti oomMxm two or more of the basle types of

stoek omtnbip plans.

fine question was askedt "Do you expeet stoek owner-

ship plans to gate la popularity in the years ahead?" All

eonpanles replying to this question predicted increasing

popularity for such planaj several, however, did not answer

the question.

Of the seventeen corapanies that responded, ten have

stoek purchase plans* three have stoek option plans, six

tmve stoek bonus plans, and six have savings and Investment

plans* {As mentioned before* sobs plans are comblnations

of t«o or a^« types.)

Questions 8 and 9 of the questionnaire to the companies

have been ineorporeted in Table 2. This table presents

the answers of the companies concerning Whether or not stoek

ownership plans have tended to redue© the rate of employee

turnover and whether or not plans have tended to make stoek-

holding employees Inerease their production.

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29

Column one of the table shows that none of the com-

panies questioned bawo boon able to measure any d«o»M«

in the rate of turnover boeauao of the s took omership

plana. Some companies did not have adequate records to

provide thoae data Mid a&m ocmpanloa responded that stock

ownership plans were only a part of their employees* bane*

fit piano and thoro waa no way to Isolate the offaot of

any one plan on turnover.

Column too shows nearly the seme response pertaining

to any increase in production. Mono ©f the companies could

p w a that plana bad boosted production, but Jewel Taa

Company atated that stock-owning eeiployees did make better

employees. Dow Chemical atatod that thoy fait that stock*

ovmlm «Bployeea tondod to «ak« bettor, more satisfied,

and intaraatod employees.

It mi#*t bo wall to point out that companies answering

"no* to the questions on reduction of turnover rata and

increased production are not saying that mora has boon no

effect, bat only that no offoot baa been noticed or measured,

TabXo 3 shows tha responses of companies concerning

their NUtloof with unions with regard to stock ownership

plana for «mployees.

the first question tabulated la ^aether or not the

responding companies have all or part of their labor force

represented by unions, of the seventeen respondents,

30

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32

fifteen have unions, on© does not, and or® did not M I M P

the question. The rest of the table takes up questions

that do Apply only to the fifteen companies having anions.

Column two asks whether or not the oeaptnita having

unions have ever negotiated with unions is setting up

their stock ownership plane, only one oonpany answered

"yea" (Atlantic Refining Cmpany).

Column Iihree asks if any of the companies have ever

included m i on officials In the administration of ttoelr

plana. Hone of the respondents have.

fh© next question tabulated la for the opinions of

coapanles regarding the positions ©f their unions. The

first sub-question asks for offlelal union reaction in

regard to encouragement of iseiaberahlp. fio interesting

points are shown by the answer®. First, only on® company

stated that Its unions encouraged their membership to

participate in the plans. This company, Atlantic Refining

Company, is the saae company that negotiated with the

unions in setting up the plan. Second, none of the eaa-

panies answered that they thought their unions were opposed

to stock ownership plans for the union asaberehip. This

second point elll be considered farther later, in relation

to union responses.

Most of the oaapanies (nine) that answered question 12

on the position of the union regarding their eneouragement

33

or diseourageaien t of membership wide the answer that th©

union took iso offioial position em the 9»«tlo».

Question 13 of the questionnaire is tabulated in the

last part of fable 3* Question 13 ask* for the partici-

pation of union members in the plans. None of the com-

panies answered that union members participated mors than

non-union members, three companies stated that they par-

ticipated less* seven companies said that they participated

about the ssae se any one else, two co»tipanies said they

did not know, end four companies did not answer the ques-

tion.

Questions $t 6* 15, l6, m d 18 of the questionnaire

were not included in any of the tables either because of

their very gmeral nature or because they were not of a

sort that lent themselves to tabulation.

tin question $0 most of th® companies mat responded

had no data available by which they could tell how long

th® heaviest percentage of participating employees had

been with the een aiiy, One company answered thai the

heaviest percentage tȣ its stockholders had hem with the

company ten years or over. Another company answered that

older employees were more inclined to purchase etoek.

Question 6 of the questionnaire asked ehat percentage

of company stock was held by its osployeea* Of the seven-

teen companies that answered the questionnaire, one company

34

answered 10 per mnt, mm answered 2 per o«ot, one answered

** substantial, * erne answered "«urtl»* five seid the infoma-

tion » s not available, and elg&t did not answer the <pe»«

tioa*

Question 15 e*Us for the chief m M M off«r«d bgr

employees for not participating in stock ownership plans.

Four companies answered that those aaployees felt they

were financially imable. light companies did not answer

the question* end five companies said they had no tnilablt

date on «fey employees did not psrtlcipate.

Question 16 of the questionnaire asks shat incentives*

if any, the company offers to employeee wishing to parti-

cipate ia etoek ownership plans* the responses to the

question ere elaaaified below.

Below naittt price by payroll deductions five eooptnlet

Payroll deductions one company lo broker*® fee . . . . . . • • . . one company Stook boost one company Average market price of a quarter . period one company

Corapeny contributions » . . . . . , six eampanies

Two companies did not offer any answer*

It again appears that the savings end Investment plans

tend to offer more to encourage employee participation*

It might be well to say that the safeguards against a

decline in the market prlee of stook seems to be aetually

one of fee greatest incentives that ©an toe offereei to en-

courage worteere to partieipate in stock ownership plsns.

35

P r e s e n t a t i o n of Pi t idings frcm Ques t ionna i res

to Onions

Ho list of names of un ions w i l l be made in I M s studyj

iMi prcials© u s mid® la the letter accompanying the mlon

questionnaire, m® unions w i l l to® Identified toy A# B# €5#.

®t eetera* Union A Is the m i m l on In Table 1 as in

Table 2 . fh© ssm Is t r u e for t h e r e s t of t h e l i s t .

Of til® forty q u e s t i o n n a i r e s s e n t out t o u n i o n s , only

t h i r t e e n sent 1 s r e p l i e s . S i x o t h e r s wer® r e t u r n e d f o r

l e ek of a p rope r a d d r e s s .

fh® unions were chosen because of their association

iritti the industries In ifoleh t h e companies sre engaged.

Therefore, there Is good r m o n to believe that many of

t h e t h i r t e e n responding unions (A through K) a r e r e l a t e d

to the responding companies. Zt Is not t h e purpose of tins

P*P«r t o prove t h i s union-company r e l a t i o n s h i p , but sorely

to gain answers and opinions from t h e unions concerning

•took owiersteip plans in their entirety.

There 1» the possibility that suns unions amy bo

r e p r e s e n t e d in two or more companies o f f e r i n g different

t ypes of p l a n s . This study a t t empted to gala general

answers pertaining to all s tock ownership plans f o r

employees and not *ti o t h e r t h e union favors one type of

plan over ano the r type of plan*

36

One other thought that it way b« veil to bring out in

that the questionnaires submitted by responding union a w»r©

filled out by individuals. Th& mamrs they give are their

©mm sad do not, to every ease, aeeessarlly mfleet the

official policies of th© union involved* fMi Imm been

pointed out to the writer in several letters received

Tram imion officials.

Table I), attempts to put in staple fort* seme general

attitudes and opinions of unions concerning stock omer*

ship plans .fa? enployees. Sine* the ®t»ib©rahip of three

of the unions does not participate in any sort of stock

ownership plan for employees, tbe table first of all shoes

this fact. The rest of the table covers questions 1, 2,

3* 8# 9, 10# and 11 of the questionnaire*

The three unions ?£iose membership do not partioipate

are shown in column otm of the table. This leaves ten

unlona that do not participate in the plans.

Column two shows that of the ten unions whose momtorn#*

Alp partielpatea in plane# two favor the plans* five are

opposed to the plans, two are neither in favor of nor

unfavorable toward the plans, and one does not answer#

Coliaan three of the table takes up question 2 of

questionnaire, 1)o you feel that stoek ownership plan#

®i#it lessen the bargaining effeetiveneas of unions with

3?

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companies?" Only two unions answer that bargaining ef-

fectiveness still be lessened.

Column few of I'able If considers question 3 of the

questionnaire. fbis question mmmmm the effeot on m i cm

loyal^, if any, itiioh the plana might have. With refer-

ence to this question, two unions (Union £ and Union M)

answered that they thought bargaining powr would toe af-

fected* Union C ocMaenteil mat atoek-omiisg ejaployeea

becoae «iinpBial minded and that management-minded em-

ployees make the worst union raeubers.

Colusa five tabulated responses to question 4 of the

questionnaire on whether stock ownership plans for em-

ployees would be good for labor-nanag«aent relations.

Few unions answered Hyes»w five answered "no,* one did

not mmmr the question. Union U stated that stock

o««rsMp «oul«l be good if enough stock eould bo hold by

labor to iaake them. & real partner in {{Management. Onion M

stated also that labor should hold enou#* stock to bo a

big factor in policy formulation of the company.

Colunn si* considers question 10 on opinions of

toward plans in regard to lessening turnover rate, en®

waioa* Union K* stated that plena id 11 lessen turnover.

Five answered mat it will not. Four did not answer the

question.

Column seven and question 11 ask if plans cause an

increase in production. One of the responding unions feels

1*0

that production would bm increased because of fete stock

osn*r«hip plans If enough stoek were hold by employees to

giv« tbsra a real voice In msnagfleiont and actually give them

more incentives.

Column olgiit and question 8 relate to opinions of ocra-

ponios *» to whether they consider stoek owioyafeip plans

for SRployees & definite trend. Three union® answered

"y««/ ^o«r answered "no," and tiara© did not answer the

question. Here it is interesting to not* that Union C,

al though opposed to a took ownership plans for employees*

does consider their usage « definite trend, particularly

among the larger companies.

Coluian niiso dtftXi with. question 9 of tflio questionnaire*

f&is question asks Aether or not safeguards should be pro-

vided for stock-owning employees. Most of the unions did

not answer this question, only one answering "yog"

two answering

fwo extrasee of opinions are exemplified fey Vm£m G

and Union K all throa^ Table If.

f a b l® 5 covers questions $, 6, and 7 of the question-

m g m to unions and deals with tfc® felationship of the

responding unions la asking for, sotting up, and adminis-

tering stoek ownership plans for employees•

Union R again ibova 19 with, a favorable attitude toserd

plana* It is the only union responding to the questionnaire

thnt ever asked for stoek ownership privileges for its

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85 «* fc

s« : fc

Jib

o w

X H X X X X X f* :

IP W • n « 1 W O

« $ X H

1

*4 ' m t ^ (H

kz

membership la negotiating a contract and also th® only

union that ever helped to sat up a plan. Ho responding

anions have actually been Included in the administration of

plana.

Oatsaral Analysis of Findings fro® Both CoispaMdea and Unions

A M l M * of similar questions were asked both companies

and unions, This section will attempt to tie together the

response fro® both parties concerning ttamm similar ques-

tions*

Question 12 ©f the questionnaire sent to companies

asked the companies what position thair unions had taken

srith regard to plana* Question 1 of the tptestionriair©

to unions asked for the general attltuda of unions with

regard to a teak ownership plans. fable 6 shows the e«-

oinea response.

tha responses of unions and eaapaiiies in Table 6 are

not necessarily related because the unions mm not in ©very

ease represented in tha seventeen companies that responded,

Zt la interesting, however, to note that none of the com-

pantos believe their unions would discourage membership

la plana while at the same time four unions (a majority)

show an unfavorable at tit tide toward plana. This would

Indicate that tha companies do. not in every ease fully

understand the position of the unions concerning stock

oanarahip plan*. It seats Improbable that a acapnia could

not mmi® mi unfavorable ettltude of a represented union

to its plan, yat none of the companies admit that union#

represented in their company hava an unfavorable attitude

toward their plans. If relationship* exist fcattwan these

particular eonpanies and unlone it may Indicate that there

i» aot very olose ecwwumlaatloa between them.

TABLE 6

COMPARISON OF ACfUAL UNION ATOfUDE TOBARD STOCK OWES-. SHIP pyufs m m coHM»y APfSAZflAL OF mim Am<m&

Company Appraisal of Palon Attitude tosher

Ae total Union Huaber

Encourage membership 1 Favor 2 Discourage membership 0 Disfavor 4

Mo position 8 Mo poaitlon Z

Ho answer 4 No anawar 1 Unknown a

total 15 9

Bi#*t oesapaRies statad that their unions took no posi-

tion in either encouragement or diseouraganant of its »«a~

barship with relationship to plana* This eatld mean that

®® offiaial tfetltsde of the union had been fait bj the oos*

P«V and not necessarily that tha official attituda of tha

unless was mm» poslt&oa*" Two vmlmm out ®f fcli© aits®

spoa&ea&s asumtrsci tbs t the i r tmloa fcoolc no afTteliil posi-

t ion m Htm m r t ic lpa t ion of thair ®#Bii©f«feip8 in th& pirns,

tout %mf% p«rtlttlps&l<Ki up to fcto# individual oMmbor* a <lis«*

crotlon.

Oae ocmpanar Imltmvm that i t s union actually soocnifftgmi

manl»mftiip to portleipttfes in plans A l l # fcw® unlosas ®hxm m

fmwmhX® mttltvM toward plaits. M » coeipaiiy l a fcfa# one

that consults with unIon offft*l*ls In fcfe« set t ing up of*

i tMk ownsrahip plans. Table 7 stasis M i aslst loashlp.

TABLE 7

OQiiMira op A»sa®s c m ^ m i m wmrnimim *%m iHE 8®TI1Q OF Of STOCK 0«EBSfiIf HJWS M*$mm

am mwm

Psaptlffilatfelffla.

Ci *a»a*« f M e n

Psaptlffilatfelffla. lip Im„ So f o

Affront

Stmt ©worship privileges &ak©d fo r

Consult i&£& union/ esnpaiqr o f f i c i a l s In s e t t l e up plait 1 Id k

i

I

7

7 %

Table 7 shows tkuit only on# union and on® caapimy

cooperated in 'lb# set t ing up of a stock osneraMp plan. In

th i s casev ths table also shoes that the union haa asked

45

for stoek ominhip privileges la negotiating It#

with the eo»^iiy.

Question 1? of the questionnaire seat to companies end

question S of the questionnaire sent to undone deal with the

opinions of eenpaiiles and anions regarding the outlook for

the fu ture of stock ownership plans f o r employees. Of the

seventeen responding caapenies, nine feel thet the outlook

Is good, i«r«o do not answer the question, snd <me feels

the t the outlook for plane depends on the general business

conditions. Of the th i r teen responding unions, three feel

tha t the future f o r stock ownership plans ie good, fear

feel thet the fu ture Is not good, end six do not answer the

question. Of the unions that did not feel the fu ture for

stock ownership plane nee good, me union stated that It

had had had experiences with stock own®rahlp plane la the

past and that it did not look far present plana to anaeeed

If tiiere should ever be a drop in the saxfcet price of atoek.

So union would be likely to encourage its membership to

Join a plan tha t they thought wes not going to gain In popu-

larity.

Table $ indicates the opinions of unions and easpaniea

m the questions of turnover rate and effeeta on prodnetlon*

©sly six companies answered the questions. Of these, all

six s ta ted that they had not measured any effset of atoek

ownership plans on t o m o w . two companies did believe that

Ml

fABLE 3

CCKFARX30S OF G3PXBIGES Pf«M COMPMI1S M O UXXOIS ©I SSB EFFECTS OF STOCK 0WS1E3IIIP HASS OM RSKJCfI©K OF

TUSSGVEl MT1S AMU XlfCHEASKD PHODWHIGM

Coeraanies . Us Question

fes Ret

J P M P M A S©%

Measured

Do stock ownership plena:

Lessen turnover rate 0 6 1 5

Increase production 2 % 1 6

•took ownerahip pirns had increased production but they eould

not offer definite proof booms* these plus cannot bo eam-

pletsly isolated tmm othor fringe-benefit® plans so tbst

the effects may bo measured. It is believed that the o«n«r-

shlp «t stock tends to wake the snployoo more conscious that

thoro is « noeossity for ths to «sks s profit. Son*

ualon offioisle do not oansldor tbls s good of foot. One

union does believe that stosk ownership both roduees turn-

**** «*<* inorossod production. This ststsnoat doss not,

& © w # f # assa tbst this union is la f » w of tho increased

production or the lover turnover rate.

0HAFTBB If

3wmmi Gmmmims,

Stsnmry

this study has atteapted to m u e n answers and opinions

front tvaaty companies and forty unions pertaining to itotit

ownership plana for employees, and to analyze the responses

obtained. Seventeen oompaniea, ©at of the twenty questions*,

responded with prospectus reports and questionnaires, Thir-

teen unions, out of forty that mm written, responded ndth

completed questionnaires and letters.

Management and labor have had a belligerent past* Labor

has ted to organise and fl^ht for many of the galas that the

worker has nade. Only in more reeent years have the employers

realised that they too may offer plans and progratns that nay

la some maimer eauso the aorkers to become better satisfied

and more protective With this realisation, sntployers have

actually come into eoropetitloa with the mlrns. Bat many

workers have felt that management would not offer employee-

benefit plans if It were not for the eonstant threat of the

organized labor force.

this study has attaapted to raise--and answer—certain

of the questions whieh the never types of stoek ownership

k7

plana might ©suae to aria® both th® oonpaniaa and th®

unions.

Should unions favor stock ownorshlp plana fox* eaployaoa?

Sow a© t&« unions foal with ragard to th© offaot of atoek

ownarahip plana on th® loyalty of thair awaabarahip who ar©

participating in plans mm being offeradf How do unions

foal th© plana will affact their bargaining power? Creations

are directed to both eaapanlea a M unions to detenaine how

stock ownardhlp plana affeot production and turnover rata.

Should cotapanles offer safeguards to stockholding employees

in th® event of a daolina in the market prie© of stoek? Is

the outlook for th© plans to gain or decline in popularity

and usage? 13m eottpanlee are asked «het percentage of

eligible employees actually partiolpata In their plana* and

the type of plan that they uae. Theae and other queetlona

are asked.

An attempt ami then made to analyze the results of Mia

queatlonnalrea, proapectua reports, and lettare* Thia re-

quired tying together information from both the conp&nles

and the unions and placing thia Information in tafias and

Charts so that it might be Interpreted and mm* over-all

conclusions a&de.

k9

Conclusions

An analysis of th© findings related to tha problaa of

atock ©*»araliAp plans for employees has rasultad In tha

following sonaluaionss

1. 3 took omtnbip plans for aaployaaa ara not wide-

spread. only a very smll paroaataga of eoapanioa cffar

tham and usually ©aly a minority of employ#©# taka advantage

of th«sa when tiwy ar# offavad.

2* ©a the whole, mioas do not favor stook ©wtarship

plans. fhls study lias shorn that of fch® responding unions,

®@r® did not favor stock ownarahip plans than €14 favor

plans* Tha tti-y faot that tha union rasponsa was so poor

might iwiiaata sons disfavor or* th® part of tha m l cms*

The unions responding offar diffarant opinions eonearning

tha omarship of stook; tha xtjorit^ opposa aaapany off arts

to inoluda union members in stook ownership plans as already

indieatad* Thaas unions ©oaaidar plans aa ©ffarad by the

©srapanias as aa attest to make tha workers mora dapandant

on tha companies and at tha sama time aa aa attanqpt to make

tha worker mora eompiusy-iaiadad and thereby staal M a loyalty

away from tha union.

Many of tha unions that responded to th® questionnaires

stated that fchay had tod had expevleneea with tha stock

ownership plans in tha 1930*a and that they were afraid of

50

a recurrenoe. Most of tha unions <1© not favor pi&m now

in existence.

3. Most of tha unions feel that the introduction of

stoek ownership plana lata had no affaet on wiion loyalty

or maintenance of wai iyataip# but on® union statea that

stockholding employees t«ad to beaoraa company minded, and

that <5 oosipany-"minded svployeea do not make the bast union

4* Saving# find investment plans #M stoek bonus plana

are sera popular than other types of atoak ownership plana

m M g employees. This may bo because of several things.

<a) ftoese plans pmida safeguards in the avast

of a decline in the market price of stoek.

(b) These plaaa offer more inducement for the em-

ployee to participate, such mm any contributions to the

employe© * s account and other inducement#.

(a) There are usually alternate courses that the

employe® way tak* alien ha is to wi thdraw M a savings from

one of the savings and investment plana. For example, ha

may withdraw his sonay in. the fern of aaeh, g<irt«—at bonda,

Compaq common or company preferred atoak*

(d) 3took bonuses in a atoak bonus plan are bonuses

given an employee in the form of atoak of the company usually

aa a reward for M a savings over a certain length of time.

51

5. Companies* many times# do not keep wall informed

atg to the degree of m m m m with which their pwtloalw plan

aNtf. Skme companies could not answer what percentage «f

eligible satployees Aid participate in their plana. Companies

did not know Just how the unions represented felt In regard

to plans* &«#e of fch© responding eoapaniea stated that they

did not enoour&ge partieipatian in atoelc plana* but merely

made stock available so that those employees tfu» fait they

would like to take advantage of this privilege would M m an

opportunity to do so.

fhls study haa hinted that there is Inadequate eomrauni-

aatiott featwaa eompaniae and unions »ltk reapeet to a took

ownar ilp plans* Mono of the responding companies stated

that their believed th© unions represented cmong their em-

ployee* discouraged ttaair neraberahiis in any way isith regard

to participation In a took oe-nerahip plana, yet a Majority of

unions itiowed disfavor toward plana as their policy. Many

of tha companies that responded to th® questionnaire atatad timt did not ®ftk© any attempt t© gain ©ffleial opinions

of unions or eiran aoployeea In regard to stoak plana. the

responding wniona also are guilty of not having adepts

information aa to th© reaction of th® membership with regard

to atook omerahip plana for aaployeea.

52

6* Many unions do not have am official poller **"

gard to the participation of their maabeivhlp in »took

ownAfshlp plAQii b ut Xm74 Moh nwb4f to hli owi diaeration.

?« Mon© of the companies have measured any redactions

of turnover rate caused by a took omemhip plana. In moat

oases the ©«pani#s fool that tto© plana do affeot tumorer

but they oaaMft isolate the effects of ©na plan trm th©

other fringe-benefit plana. The aame la true for affaeta

on production.

It may be said that on© of the purposes of offering

a took to employees is to make the employees more favorable

in their attltudaa toward tha company and the company's pur-

pose of making a profit. It irauld be natural that a company-

minded employee would tend to put more effort into M s work

if he thought that it might produce for him a larger dividend

from the stock that he owned. Heither would the employee

be ao apt to qait hia job for another if he had "all hie

eggs in one basket. **

8* Of the seventeen companies that responded,, all but

on© have unions present in their company. M s ml$xt tend

to show that union presence tea encouraged companies to offer

atook ©waerAip plana, {the companies m m not chosen because

they did ar did not have maim® representing their employees*

but beeauae they offered fcanal a took owMMkip plana for

their employees*)

53

9* finer# could and aiio«ld be asvefa eloitr cooperation

bet wean acMpsnlM and unions on stock ownership plans for

employees,. Th® one ecmpany tiiafc IxmMUmi fc&© rndon in tha

setting up of atoek ownerahlp plans has a very high par-

eantago of eligible employees partioipatliig In its plan*

fMa union haa asked for atook ownership pririlegee in na~

gotiating £h© contract with the company. Thia relatlonahip

nay WMWMfc that the company and tha union can gat along if

both partiaa shot willingness to do a®.

laeowmendati ona for Further Study

Hha atudy of atoek ownership plana for anployaaa haa

w m j ooaplax features. Ho two plana are alike* Ho two o«-

paniaa haira the same background in the field of labor m ~

lationa, Ho two unions have tha acsaa backgrounds or exaatly

s m m outlook. The future is always uncertain a a to

tshether buaiaeaa will b® good or bad. Zha mmmm of atoek

ownarahip plana for employees hingaa cm all thaaa and other

factors.

H*at seems to ba most needed la intensive case study of

individual situations. Many of tha questions aakad in thia

atudy could not ba adequately answered by aithar tha a<npanlaa

or m a uniona* probably because they did not know the answers.

Itaiiy plana ar® so mm that no atudiaa have been made in ordar

to determine what effaota tbay have had.

It m i d be Mil if tti* relationships between spoolfie

ecmpanlmm a»& unions could be correlated* la this wanner

each type of ptm could be studied and m» wanner la whioh

It Is accepted by the union involved could be ascertained.

Also a complete study of the background of Xsbor relations

between each eootpany and each corresponding union would be

Md« possible.

Each type of plan could well be studied MptnUly and

thoroughly, bringing out the advantages and disadvantages

of each, men all types of plana could be more effectively

compared.

A thorough study of unions should be made determining

the reactions of a much larger number than this study has

had the opportunity to examine. Hot only unions known to

be participating in plans used to be studied, bat also the

unions that do sot have membership employed by companies

offering plans.

It warnId be well if seme aore thorough study were made

with regard to the effects of stock ownership plans for em-

ployees 011 production and turnover rate. To do this It would

be assesses? to isolate stook ownership plans from other

fringe-benefit plans.

Peitiap* the eeonaaio outlook will have a great deal to

do with the success of stook ownership plans for employees.

If the Market value of stocks declines it Is possible that

$$

stockholders wadmr am» types of plans will &« hurt, and

fcjjat such plan# will again lose popularity* A study of

tha poealbla aafagnards mat algit fee afTarad «vployaaa an*

those that ara now ©ffarad should tea nltabli.

APFBHDIX A

Smsatloiiiialm to Companies

Questionnaire cm Stoek Ownership Flans for Employees

1. Do you have a®$r form of stock ownership plan# for employees?

»* J9M * — * . b * TO

If yea, pleaee check the typo cf plan uMdi

stock option stoek purchase stock bonus other (Pleaae specify,)

2. To what type* and levels of employees have you extended

stoek ownership plans?

3* B®» much time must an employee be with the company before

he Is eligible?

*h»t percentage of eligible employees participate In

your plan?

5* Of the partieipating employees* has the heaviest percentage been with the company

a, 1 to 2 years b. 2 to $ years c» S to 10 years

............ &• 10 years and over

6« Whet percentage of company stock is held by employees?

56

m

7. Does ymr company offer any safeguards to stockholding aoployeea la event of a dcella» in tti« market price of stock?

^ a. yea _ !»• no

If yea» what typos of aafeguarda?

Am- general W M i l t

3. Have you noticed any reduction in turnover rat© among employeea participating in thia plan?

^ a. yes | b» no

If yaa can you estimate the percentage of improvement

In thia respect?

Any gaoeral o amenta on effeet on turnover

9. Bave yon. noticed any effeet on produetion elnee th© initiation of your atoek ownership plan?

_ a« yaa

If yea* what prinoipal affeota?

10* Do you have a union?

^ a* yea ^ b. no

If yea* what percentage of employees era members of

the m i on?

50

XI* "Which mlOB or unions as*© i*epreaent©d 1b your company?

12. If you have ft union, that position has it taken regarding your atook ownership plan?

a* enoouragment of amberahip b* no position c. clio courage eat of Membership

13. Do your union nenbers tend to take advantage of tha plan

_ a. aora than none-wnion members _ b. laaa than non-union sealers ^ e. about tha ease

14. Are union officials consulted In tha setting up of a took ownership plana for aaployees?

_ a. yes b. 3ttO

Are union officials included in tha administration of a took ownership plana for aaq loyeea?

^ a. yes — :a®

15. What chiaf reasons do eaployeea offer for non-participation in a took ownership plana? (eomtent)

16. What ineentivea, if any* does the ocaipany offer to ea-ployeea wishing to ja rtieipate in atook option plana? (lawtplei atook offered at below aerfcet price* atook bonuaes, ate.}

17 • Do you expeot stock ownership plana for employees to gain in popularity and use in the years ahead?

a, yea b, no

59

I f 7«t , plaasa a ta to principal m a « u i

18, Plaaue give any auggaatlaoa, o r i t i c i m a , o r ca*nent» tha t you might have ragarding t h i s subjeot.

APPBHDIX B

Questionnaire to Unions

Questionnaire of Stoek Ownership Plans for Employees

What is jour general attitude with regard to employee participation in stoek ownership plans for employees offered by various ecmpanies? {Please comment*)

2, Do you feel that stoek ownership plans might lessen union bargaining effectiveness with companies?

a. yea — — b* no

(Please eomient)

3# Have you notieed any effects on union loyalty and mainte* nanee of msmberahip among union members who participate in employee stock ownership plans?

a« yes

(Please comment)

4* Do you feel that employee ownership of stock might be a solution to some labor-management problems?

&. yes b, no

(Please comment)

$• Has your union ever asked for stock ownership privileges in negotiating a contract?

a. yes b. no

6o

6l

6* lav® m i on officials ever consulted «£fch manageaant on the setting up of stock ownership plansf

a. yes L""rj';"""1" b. no

?• Have union officials ever helped in tha adiaini atration of stoek ownership plana for employees?

a. yes ' b. no

8. Do you fee! tfeat a took ownerahip plana for employees are a dafinita trend?

a. yea b# a©

(Please comwent)

Should safeguards be offered stockholdlug employaea in the mmt of a decline in the nartoet prioa of atoek?

a. yes b# no

If ye*, vhat aort?

10* Doaa the owaerii ip of a took by onployeea tend to lessen employment turnover?

a* yea """"1" b. no

11. I>oea the omerahip of stoek by anployeea affect production In any manner?

a. yas — b* n o

If yes, how?

12, Please give any suggestions, criticisms* or ooesnents that you night have regarding this subject.

APFBKOEX 0

1^09 Maple Street Benton, Texas November 9, 1953

Gentlemen:

As a student at North Texas Stat® College I am attempt-log to writ® a Master's thesis. The subject of this thesis pertains to stock ownersMp plans for employees.

I am attempting to gain answers mad opinions from a number of unions concerning the various forms of a took ownership plana now in existence.

Your answers to the enclosed questionnaire will aid me greatly *nd will be sincerely appreciated.

All names of individuals and unions will be withheld.

Sincerely,

Frank 1, MeClaln

Enclosure

62

RXBLXOOBAPBr

Blomfield, Daniel, Financial Iftcentlveiy f&r p^gyeey «M Executives. Mew York, E. W# Wilson Company, 1923*

Chsasberlain, »eil W., ffee Union Challenge Management Control. lew York, Harper and Brothers, 1 ^ 7

Louden, J» Keith, Wage Incentivea. Hew York, J. Wiley and ^ j & MMRR9iMMwn*r * w

Sons, l9Mf«

*ee, John P., Personnel Handbook. Mew York, losiald Preu Company, 1951.

Mational Industrial Conference Board, llfiMgffl* Ke^lSte^ ir 8* stud*®» i» Person**#! Policy »o, f

Matianal industrial Conference Board, m m k Omerahlp Plana or Workers* Steves In Personnel Policy Ho* 132, lew ront, 1953.

mffnar, John 3apfn|',lon s£ f»r«ona«l. Hen York, Prentice-Hall, Inc., 1951*

Standard and Poor's Coloration, Po^^s SH SflSfCfrppf MB* I S B S M m # «•» York# 1953.

Wame, Colston 1. •til., £altt£ la EftffftfUf iaE^SS* Brooklyn, Rensen Press, 1%9«

Article#

Dixon, Karl S., "The Worker as a Fiscal Partner in Industry,1' Management Review, XLI (Januaxy, 1952), 53-54«

"Coupon ,EI Bonds,* Business Week (September 8, 1951 h 98#

"How Mmch Stoek Do Wooers 0«," M i Maintenance. CX (September, ~

63

62|

Pattoa, Arch, "«ho Should &«% 3took Optics#* Journal. XXX (April, 1952)# 1j,17-42 *

atonm, Louis, "B*ploy»« Stock Purflh«»« Pl«n»," SS« and Flajuaolsl Journal. CLXXV (April# 1952), 1703

Reports

Prospectus of aaployee 3took 0worship Plan tvtrn ®ae& of seventeen ©©operating eoBp*nlt«.