ESOP Analysis and Evaluation.doc

文档介绍：Who Pays for ESOP Shares?:
ESOP Analysis and Evaluation
David Ellerman
World Bank* The findings, interpretations, and conclusions expressed in this paper are entirely those of the author and should not be attributed in any manner to the World Bank, to its anizations, or to the members of its Board of Directors or the countries they represent.
Table of Contents
Who Pays for ESOP Shares?:
ESOP Analysis and Evaluation
The Ideology of the ESOP Movement
Labor-based Aspects of Conventional ESOPs
The Basic Contribution of the ESOP Idea
Who Pays for ESOP Shares?
Technical Analysis of "Who Pays for ESOP Shares?"
The No-Dilution Argument
ESOP Loan = Direct Loan + Diluted Sale
What About the No-Dilution Argument?
The Case of a Non-Leveraged ESOP
An ESOP Loan--Compared to What?
Analysis with Non-Negligible Worker Shares
Analysis of the Leveraged ESOP Buyout Transaction
Numerical Example of Buyout Analysis
Non-Tax Benefits of ESOPs
References
The Ideology of the ESOP Movement
ESOPs are certainly touted as "worker capitalism"—although the reality is interestingly different from the advertisements. But first we should consider the ideologies surrounding ESOPs.
The originator and popularizer of the leveraged ESOP was Louis Kelso. Kelso's "two-factor theory" is particularly bizarre. When today's economists talk about "productivity," they are referring to labor productivity. Kelso apparently inferred that capitalist economists think that labor is the only productive factor (never mind over a century of criticism of the labor theory of value by the same economists). Kelso has discovered another productive factor, capital, so there are really two productive factors, labor and capital. Kelso announced this discovery in a book Two-Factor Theory (Kelso and Hetter, 1967), and his theories are often referred to as "Binary Economics" (see Kelso, 1988a).
How does all this relate to ESOPs? Kelso claims that capital is much more productive than labor, and that if lab