Corey Rosen, the executive director of the National Center for Employee Ownership, is such a believer in the cause that even after he retires next week, he plans to volunteer four days a week at the organization he founded 30 years ago.
“This is like a hobby for me,” he said.
Mr. Rosen will formally give up his title at his organization's annual conference in Denver, April 13-15.
In an interview in his Oakland, Calif., office, Mr. Rosen predicted more companies will embrace employee stock ownership plans in the next seven to eight years as private company owners who are aging baby boomers decide that a logical exit strategy is to sell their ownership interests to employees.
If Mr. Rosen is right, the ESOP concept could get a boost after a slight decline: The number of ESOPs dropped to 10,500 at the end of 2009 — the most recent data available — from 10,700 at the end of 1999, according to data from the employee ownership center.
By contrast, the number of plans doubled between 1980 and 1990.
“Like any growth phenomenon, it reaches an equilibrium stage,” Mr. Rosen said. “The number of plan terminations is inevitably similar to the number of new plans. It doesn't mean employee ownership is not successful, but there are limits to its growth.”
Mr. Rosen said a prime reason ESOPs are terminated is successful ESOP-owned companies are sold.
There have been some noticeable ESOP failures, however, including United Airlines and the Tribune Co.
Mr. Rosen said the UAL Corp. ESOP, which lasted from 1995 to 2000, had several fatal flaws, including the lack of participation by the flight attendants' union and that neither management nor labor unions were committed to making the ESOP work.
He said the Tribune ESOP, which is in the process of being dissolved as part of the company's bankruptcy, failed because the company already was in severe debt when the plan was created.
“It shows you don't buy dead horses and expect to win the Kentucky Derby,” he said.
Mr. Rosen said ESOPs will turn out to be a good option for many business owners, allowing them to sell their interests under the favorable tax treatment allowed an ESOP, while passing along the company to new, committed employee owners.
For Mr. Rosen, a passion for employee ownership began in 1979. While a staffer for the U.S. Senate Small Business Committee he helped draft legislation that allowed owners of closely held companies to take a capital gains tax deferral when selling their stake in a company to an ESOP.
The first ESOPs started in 1974 after Congress created legislation authorizing the concept. The capital gains tax deferral on which he worked helped fuel a boom in new plans.
Mr. Rosen said he still adheres to his original belief from the late 1970s that if more people knew about the idea of employee ownership, more people would find it attractive.
“Work for most people is not a very pleasant experience,” he said.
Mr. Rosen said many employers reject employees' creative ideas because creativity is not a part of the top-down corporate culture.
“The consequence of this is that companies are not as efficient,” he said. “They are missing the people who could contribute.”
A key conclusion of the center's various studies over the years is that employee ownership succeeds not just when employees have a financial interest. Mr. Rosen said the most financially successful companies allow employees creative input to contribute their ideas through work teams and other channels.
The National Center for Employee Ownership has 2,700 members. They include not just employee-owned companies, but also public ones with ESOPs such as Procter & Gamble Co. and those with non-ESOP stock ownership plans like Starbucks Corp.
Rather than lobby, Mr. Rosen's organization focuses on education about employee ownership.
While loving his job, Mr. Rosen said he decided some time ago that 30 years would be enough as head of the National Center for Employee Ownership. He said he wanted new leadership before he got burned out or had health problems.
“It's very important that we had an orderly transition,” he said.
Loren Rodgers, a project director who has worked at the NCEO since 1995, will succeed Mr. Rosen.
In the meantime, with retirement only days away, Mr. Rosen said he is still trying to figure out what he will do with himself on the one day he isn't volunteering at the center.
“I always felt when I retired I would find some new cause,” he said.