A Private-Equity Executive Pushes for Workers’ Stake in U.S. Companies
A co-head of KKR’s global private-equity business wants to change federal law governing employee stock-ownership plans
A new coalition is pushing to expand employees’ stock ownership of U.S. companies, saying it would help ease the country’s wealth inequality.
The group was assembled by KKR KKR -0.19%decrease; red down pointing triangle executive Pete Stavros and will advocate to update a 1974 federal law to make it easier for workers to own a part of their public or private company. Stavros, the son of a construction worker who unsuccessfully sought profit-sharing, said the goal is to achieve Congress’s original intent for the law.
“The vision was: How much better would our economy be if workers owned a piece of every company in America?” said Stavros, co-head of KKR’s global private-equity business.
Stavros formed a separate group two years ago to encourage private-equity firms to give more ownership to lower-level employees at the companies they own. The latest effort would encourage other types of businesses to share stock with workers under an employee stock-ownership plan, or ESOP, a structure that offers companies tax incentives in exchange.
The new group, Expanding ESOPs, is made up of more than 50 foundations, academics and service providers such as law firms and banks. The Rutgers Institute for the Study of Employee Ownership and Profit Sharing, the Ford Foundation and the National Center for Employee Ownership have been involved.
Among other things, the group wants lawmakers to make sure workers get their stock at a fair valuation, that the plans benefit front-line workers over top executives and that the benefits from any tax breaks flow to workers. The group has hired political advisers, and Stavros has met with dozens of members of Congress.
Stock ownership is a big driver of wealth disparity. The richest 10% of Americans held $34.7 trillion in stocks in 2023, compared with $410 billion for the bottom 50%.
Some companies that have given employees ownership stakes have tied it to improved morale, less turnover and greater productivity.
Most employee stock-ownership plans formed each year are small businesses where workers take full ownership. Such deals can be hard to execute at big corporations, however, and the coalition is focusing on a version of the plan that gives workers partial ownership for different tax benefits.
Adoption of the plans boomed after the law’s passage, but now only about 6,000 companies have them, according to the coalition. Growth of the plans stalled after the government sued some individuals who had formed them, alleging that they had kept the tax benefits for themselves and given little to workers.