Fluorocarbon Sets Up Employee Stock Plan
Fluorocarbon Co. on Thursday joined the growing ranks of U.S. corporations putting more of their equity into workers’ hands by creating an employee stock ownership plan to buy as much as $5 million of the company’s shares.
The company, a manufacturer of rubber and plastic industrial products, plans to buy $500,000 of its own stock on the open market, beginning Feb. 3, 1990, and place it in the plan. Fluorocarbon’s directors also approved the purchase--at an unspecified date--of up to $4.5 million in stock for the plan.
The company said the amount of stock bought for the plan will depend on its financial performance and certain other factors.
“We believe our stock is a good investment,” Chairman Peter Churm said. “We also believe that employee ownership will encourage more involvement in the operating performance of the company.”
The firm’s stock closed Thursday at $13.625, up 12 1/2 cents in trading on the New York Stock Exchange. Fluorocarbon’s stock has traded in a narrow range in the last year, hitting a high of $16.25 and a low of $12.125.
At current market prices, Fluorocarbon employees would own about 5% of the company’s outstanding shares if the firm bought the entire $5 million in stock authorized by its directors.
Employee stock plans have become increasingly popular in corporate America in the last few years.
Chevron Corp., Lockheed Corp. J.C. Penney & Co. and Procter & Gamble Co. are among the major corporations that have set up such plans.
A recent Gallup survey found that such plans give about 10 million U.S. workers a stake in more than 9,600 companies.
The plans have proven popular for several reasons. Companies believe that workers who own stock will be more involved and productive in their jobs because they have a greater stake in the firm’s success. Such plans also give corporations a tax break, can help defend against a hostile takeover and, in some cases, help control the cost of pensions.
Critics of such plans say it has never been proven that the plans actually encourage increased productivity. And they say the plans place employees’ pensions at more risk because a greater share of their retirement package is in company stock--subject to the whims of Wall Street.
Dan Hathaway, Fluorocarbon’s senior attorney, said the main reason for the plan is to encourage more employee involvement.
Protection against an unfriendly takeover “wasn’t a consideration,” he said.
The company employs 3,200 workers worldwide. Employees will become eligible to participate in the stock plan after one year of service, Hathaway said.
