The Governance of ESOPs in the United States: Limits of and Alternatives to the "Patrimonial" Model

Alexia Autenne

Postdoctoral Researcher National Fund for Scientific Research and Lecturer, Universite Catholique de Louvain and Universite Libre de Bruxelles

jcls Vol 6 Issue 2 (October 2006)

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Abstract

The present article attempts to shed some light on the particular issue of ESOPs governance in public companies. It shows that the institutional configuration of ESOPs conveys an affiliation to a governance logic qualified as "patrimonial", by reference to the works of the French Economist Aglietta, who stated that, from a macroeconomic point of view, the gradual financialization of salary wages is but one of the facets in the emergence of what he calls a "finance-led" regime of growth. Through a series of case-law examples, it highlights some difficulties encountered in the regulation of ESOPs and some of the ways in which ESOPs fail to serve their indented purpose as a means of involving employees in ownership of their firm. Then, without especially asserting that there is a direct causal link between the "patrimonial" orientation and the highlighted difficulties, it points the need for a reconsideration of the institutional organization of plan governance itself. As an illustration, it mentions some alternative forms of plan governance that are nowadays emerging or existing, be it inside the US legal system or outside, and which organize an institutional participation of employees in the implementation and governance of employee share ownership schemes, a type of governance termed "partnerial".

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