Abstract
The premise of this paper is that state aid to distressed companies should benefit not only the current owners but also the employees, who are the ones taking personal risks to continue or restart companies. Government aid during the Great Recession was aimed primarily at restoring the status quo. In the current deeper crisis, aid should be designed to create a fairer, more inclusive and more socially responsible economy by promoting employee ownership as both an incentive and a reward. We show how the Employee Stock Ownership Plan, which has been pioneered in the US for 40 years and can be adapted to the European legal context, can be used as the vehicle for structuring this aid.
Highlights
The premise of this paper is that state aid to distressed companies should benefit the current owners and the employees, who are the ones taking personal risks to continue or restart companies
We propose that employee ownership (EO) be structured according to the American Employee Stock Ownership Plan (ESOP) model
The general idea is that the value of state help should be matched by newly issued shares or treasury shares, which are transferred to Co-Op-ESOP trusts
Summary
The premise of this paper is that state aid to distressed companies should benefit the current owners and the employees, who are the ones taking personal risks to continue or restart companies. This paper proposes concrete, practical and bi-partisan policy addenda for governments to use aid packages to establish (part) EO both for private and state-owned enterprises. This trust-like entity maintains ownership among the current employees of a company even through generational transitions of workers.
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