Leland Stanford/Robert Beyster/Decreasing Share of Company Stock in 401(k) Plans

The Employee Ownership Update for October 15, 2007

is now online and discusses the following items:

Leland Stanford and Employee Ownership

This section discusses Leland Stanford, an American tycoon, politician and founder of Stanford University, and his support of employee ownership:

"Stanford worried that the accumulation of capital in too few hands would ultimately threaten capitalism itself, as well as be unfair to working people. His views presage the writings of Louis Kelso almost a century later in arguing for employee ownership. Stanford's bill was favorably reported out of committee, but illness prevented him from taking it to the floor and it never went further. At the university, there was a course in worker cooperatives in the first year, but Stanford's health problems prevented him from pushing the idea further. After he died, his successors quietly buried the idea"

Beyond Capitalism: Leland Stanford's Forgotten Vision documents his vision.

Special Offer on Robert Beyster's Book About How He and Employee Ownership Built SAIC

We discussed Science Applications International Corporation (SAIC), J. Robert Beyster's book The SAIC Solution: How We Built an $8 Billion Employee-Owned Technology Company, and his blog in this blog post:

In The News: Employee Ownership, Satisfaction, Competence, and Experimentation Culture

The Update calls the book "a valuable resource on a company that the business press has largely ignored.", and provides a brief description of the history of SAIC, including Beyster's core principles: "Hire very smart people, encourage their entrepreneurial spirit, let them focus on customers, and reward them for their contributions."

Holdings in Company Stock Continue to Fall

This section discusses the EBRI/ICI Participant-Directed Retirement Plan Data Collection Project and highlighted the following company stock-related key finding:

"401(k) participants continue to seek diversification of their investments. The share of 401(k) accounts invested in company stock continues to shrink, falling by 2 percentage points (to 11 percent) in 2006. That continued a steady decline that started in 1999. Recently hired 401(k) participants contribute to this trend: they are less likely to hold employer stock."

It also provided a description of the Project:

"The EBRI/ICI Participant-Directed Retirement Plan Data Collection Project is the largest, most representative repository of information about individual 401(k) plan participant accounts. As of December 31, 2006, the EBRI/ICI database includes statistical information about:

• 20.0 million 401(k) plan participants, in
• 53,931 employer-sponsored 401(k) plans, holding
• $1.228 trillion in assets.

The 2006 EBRI/ICI database covers 40 percent of the universe of 401(k) plan participants, 12 percent of plans, and 46 percent of 401(k) plan assets.

The EBRI/ICI project is unique because of its inclusion of data provided by a wide variety of plan recordkeepers and, therefore, portrays the activity of participants in 401(k) plans of varying sizes—from very large corporations to small businesses— with a variety of investment options."