Fred Hackworth
Fred Hackworth is the international director of The Esop Centre.
In what ways does employee share ownership serve a useful purpose?
Eso helps create a more inclusive society and encourages employees to think more about why they are there and less about clock-watching. Involvement in Eso gives participants an on-going seminar about what shares are, how their value can oscillate and the advantages of long-term ownership.
How can we widen and deepen the adoption and use of employee share ownership?
Reform the secondary education system to make lessons in basic household economics obligatory – what a bank account is and how a mortgage operates etc., as well as what companies are and what their priorities are and their responsibilities to employees and other stakeholders.
Companies should reward their long-term employee shareholders with occasional supplementary awards of free shares – and other additional benefits.
What would you tell someone on the fence about introducing employee share ownership to their company?
Start-up entrepreneurs should ask themselves whether they can afford to incentivise high performers beyond the appropriate salary or wage band through cash bonuses alone. If not, a share or share option scheme may well be the right answer. Exiting entrepreneurs should consider how they would feel if their business were broken up by an acquirer after a trade sale. A staged sale to the employees through an EOT, for example, would stand a better chance of keeping the jobs and plant in the local community.
What do you think will change about employee share ownership over the next five years?
Most governments will be reluctant to improve tax and NICs exemptions, where they already exist, except as part of a strategy to rescue their economies from the doldrums. The financial and regulatory costs of setting up and operating all-employee share schemes will deter increasing numbers of smaller quoted companies from adopting Eso, but the multinational companies will continue building up their own Eso schemes. Ditto the gazelle-like high-tech start-ups, where the use of EMI and other schemes will proliferate.
What has been the most important development in employee share ownership during your career?
The introduction of the Share Incentive Plan (SIP) – in which shares are purchased out of pre-tax income and often matched by employers – and the very popular EMI, which is a share options based incentive beamed at key employees (not necessarily directors). Both are tax approved and both were introduced by the socialist chancellor Gordon Brown!
Which change to employee share plans legislation, in the UK or elsewhere, would you most like to see?
Employees of all European based companies with more than 100 employees should have the right to demand the introduction (if not already installed) of Eso by their employer who, equally, should have the right to refuse, provided good reasons are given to the employees for not doing so.
Plan rules should be made more flexible so that the trustees, if so minded, can introduce mechanisms to allow the spread of employee shareholdings across a range of outside companies and funds. The guiding principle would be don’t have all your eggs in one basket. Some French Eso schemes have permitted employee shareholding portfolio spreads – as long term savings plans – for decades already.
Why do you think employee share ownership has enjoyed cross-party support in the UK?
Eso has long been seen as a ‘good thing’ to do, but the sudden rapid increases in national minimum wage and the like have somewhat mitigated the moral imperative of helping the low-paid. Eso fits in almost perfectly with the mood music of the Lib Dems. Many Tories like the trickle-down element in Eso (how to get employees to love capitalism), and even unions like the CWU have accepted Eso as a last resort when failing to stop privatisation – as in the case of the Royal Mail. Nevertheless, many UK unions remain hostile to Eso, much more so than their counterparts, notably in Germany and Italy.
What is your idea of perfect happiness?
Sun-lounger reading, under a parasol with a glass of Louis Latour Meursault to hand, in my garden, poolside…
What is your most marked characteristic?
Resilience.
What do you consider your greatest achievement?
To have taught (if that is the right verb) a class of London dockers’ children for my gap year before university. Their parents were from so many different countries that the teaching staff nick-named my class: ‘The Commonwealth Conference’. I stood before them daily, at the ripe old age of 19, in my first-ever suit (a Burton off-the-peg number) and lived to tell the tale…
What historical figure do you most identify with?
Napoleon’s nemesis Talleyrand, almost the only one left standing at the end of 25 years of revolution, regicide, war and mass executions. He even had a district in east Manchester named after him.
Which living person do you most admire?
The Japanese novelist Haruki Marakami, who wrote 1Q84, Norwegian Wood and Kafka on the Shore, among others.
Who are your heroes in real life?
Night staff at hospital A & E departments.
Which word or phrases do you most overuse?
‘Just a minute’.
What is your most treasured possession?
A Staunton pattern chess set.
