Corporate Employees Get Piece of Profit Pie

LOS ANGELES -- Employees of major companies have complained in recent years that they have been working harder while getting a shrinking share of the expanding pie of corporate wealth.

That now appears to be changing.

Many management experts say last week's announcement by Levi Strauss & Co. that it will reward its entire work force for meeting enhanced growth targets through 2001 reflects a new corporate mind-set that business success means giving the worker a tangible stake in corporate profits.

Throughout American industry more corporations are considering or instituting stock option plans and other bonus programs aimed at aligning the interests of not just top managers, but huge portions of the work force with the interests of shareholders or other corporate owners.

Of course, nobody suggests that employees are about to displace shareholders as the corporate constituency most likely to be coddled by management. Companies seeking to cut costs still look first to the labor force, either by cutting employment outright or by "outsourcing'' more production to outside workers who don't get as much in wages or fringe benefits as regular full-timers.

Nor are rank-and-file employees in line to receive the rich option payouts still enjoyed by top executives and even middle managers at top U.S. companies.

But recent management surveys indicate that more workers are being offered a piece of the pie.

About 3 percent of the top 1,000 publicly held companies in the United States make some grant of options or restricted stock to all employees, according to a survey by the newsletter Executive Compensation Reports; 56 more have board authorizations to do so but have not yet implemented programs, according to the newsletter.

Of those programs, half have been implemented since 1994. Only one predates 1989. (The exception is the egalitarian and successful Hewlett-Packard, whose option program was established in 1957.)

Other surveys indicate that many more companies grant stock or stock options broadly through their organizations, even if not to everybody. Between 8.5 percent and 13 percent of top U.S. corporations have made such grants to at least 60 percent of their workers in recent years.

"You just didn't see this in the 1980s," says Corey Rosen, director of the Oakland, California-based National Center for Employee Ownership, who adds that the number of corporations asking his organization for help in devising such plans has burgeoned. Employee options programs commonly take several forms. The simplest versions grant workers a given number of shares if they remain at the company for a certain period of time. Because the option price is generally set at the time of the original grant, the employees pocket whatever gain has been racked up in the interim.

More elaborate programs require corporate performance or share price to clear certain hurdles in order for the options to kick in, theoretically giving the work force and management a shared goal.

The expansion of share ownership to wider groups of workers is at least partially a reaction to intense criticism of corporations for focusing heavily -- many say excessively -- on maximizing shareholder profits at the expense of most other participants in the corporate culture.

Throughout the 1990s, critics observe, companies turned out record profits and rewarded shareholders with historic gains. But employees suffered mass layoffs and corporate philanthropy shriveled.

It was once considered "un-American ... for a business not to share the benefits of its success" with its workers and communities, observed Labor Secretary Robert B. Reich in a speech in Washington earlier this year. That mind-set expired when global competition transformed American companies "from comfortable and stable rivals into bloodletting gladiators."

A number of management experts say that while shareholders contribute money, many other "stakeholders" make investments of equivalent value.

Such stakeholders include employees who may have devoted their lives to a company; communities that have provided plant sites with schools, libraries, sewer systems and tax exemptions; and even the air, water, flora, and fauna that make up the environment.