Employee share ownership in Europe remains low

Equity is becoming a mainstream part of compensation packages, as early-stage companies compete for top talent, particularly in regions like Europe that have up until now moved more slowly than startups in the United States. The success of companies in Silicon Valley, where employee share ownership has been normalised, has remained unmatched in many other parts of the world.

For its State of Equity and Ownership Report 2022. equity management company Ledgy surveyed more than 1,000 employees, executives and founders in different industries, in 12 European countries, in the United States and Israel. The survey presents the following highlights.

Misalignment between founders and employees
According to the results of the survey, a significant proportion of founders (33 percent) believe that share options make little or no difference to employees’ motivation. However, 75 percent of employees with share options say their stakes do make a meaningful difference to their motivation. In times when the market for top talent is more competitive than ever and resignations are on the rise, the report concludes that better alignment between management teams and the wider company is essential if businesses want to build equitable and values-led workplaces.

Employees often left out in the fundraising process
Of all companies that raised capital last year, seven percent of companies that had raised money in 2021 spent no time at all discussing share options when speaking to investors. In Germany, the figure was even higher, with 13 percent of companies failing to bring employee ownership to the table.

Low stakes offered to employees in Europe
Ledgy also analysed differences between the amounts of equity companies allocate to employees in different markets. The report suggests that European countries still trail the United States when it comes to the generosity of employee option pools. The majority of European companies offer between 10 to 15 percent equity options, and they are three times more likely to give employees 5 percent or less of total equity when compared with their peers in the United States and Israel. with the Netherlands standing out with 15 percent.

The State of Equity Ownership Report presenting details from the survey is available for download via Ledgy.

(Press release/RAN)
Photo: Ledgy’s co-founders Ben Brandt, Yoko Spirig and Timo Horstschaefer