What is Steward-Ownership?
Steward-ownership is a corporate ownership structure that presents an alternative to shareholder value primacy.
It ensures that companies prioritize their long-term purpose over short-term profits – by legally enshrining two principles:
SELF-DETERMINATION
Power over the company cannot be speculated with but is held by people directly connected to the company’s operation and mission: stewards, not absentee owners.
PURPOSE-ORIENTATION
Profits are means to a purpose, not a goal in itself. Value created in the company cannot be extracted by the shareholders. Profits are reinvested, used to cover capital costs or donated.
PROVEN AND INNOVATIVE MODEL
Steward-ownership brings together start-ups, medium-sized businesses and large corporations. It combines modern with traditional entrepreneurship, sustainability with profitable business.
It is a proven ownership model that has been in place for many decades – having been implemented by companies like Zeiss (Germany), Novo Nordisk (Denmark), Patagonia (USA), Bosch (Germany), Signal (USA) BuurtzorgT (Netherlands), Carlsberg (Denmark) and many others. At the same time, it presents an innovative alternative to conventional ownership models. It allows start-ups to legally safeguard their purpose-oriented businesses and enables medium-sized business and Hidden Champions to set-up sustainable charters, where successors can become steward-owners independent of family affiliation or acquisition power. It also allows large corporations and market leaders to set up aligned and sustainable structures for the future.
Steward-ownership has the potential to contribute to creating an economy fit for the 21st century.
Instead of trying to change corporate behaviour on the surface, it focuses on the very core and DNA of a company – namely its ownership. By addressing fundamental structural deficiencies of our system, it retools the goals and incentives that guide decision making. Steward-ownership (re)prioritizes the purpose of the company instead of maximizing short-term profits; and it safeguards the company’s independence in the long-run.
FORMS OF IMPLEMENTATION
Double Foundation Model
A standard model that legally separates money and power: One entity holds the control rights, with its managers functioning as stewards for the company. Another, charitable, organization holds the economic rights and the capital shares of the company. Examples: Bosch (Germany), Patagonia (US), Globus (Germany).
Single Foundation Model
Another classic model: All voting and economic rights of a company are held by a self governing non-profit foundation. It acts as a shareholder and guardian of the steward-ownership structure and principles. Examples: Novo Nordisk (Denmark), Zeiss (Germany), Carlsberg (Denmark), Märkisches Landbrot (Germany), Elobau (Germany).
Veto Share Model
In this model, the guiding principles of steward-ownership are being included into the company’s articles of association. The steward-owners of the company hold 99% of the control rights, but no economic rights. 1% of the control rights, the so-called “veto-share” or “golden-share”, is held by an independent non-profit entity. It has the right to veto any article changes or actions affecting the principles of steward-ownership. Economic rights remain within the company or can be given to investors or founders – but only to a limited extent. Examples: Ecosia (Germany), Sharetribe (Finland), Wildplastic (Germany).
Perpetual Purpose Trust
In the US, a Perpetual Purpose Trust (PPT) is a common model for installing steward-ownership. A PPT is set up for the benefit of a purpose rather than a person and can operate indefinitely. It holds the shares of the company. The trustees (i.e. steward-owners) control the PPT, but cannot extract the value or profits of the company. Examples: Organically Grown Company (US), Firebrand Artisan Breads (US).
Employee Ownership Trust
In this model that is especially common in the UK, the shares of the company are held by an employee ownership trust. Thereby the company is indirectly controlled by its employees. If the employees only have limited access to the dividends at the same time, the setup corresponds with the principles of steward-ownership. Examples: John Lewis Partnership (UK).
Something we don’t know yet
Although the term steward-ownership has been coined 2015 in Germany for the kind of corporate ownership structure implementing the two principles above, there might be other implementations in other countries, cultures and communities. We would be very excited to hear about them! Please get in touch!
Source & copyright: https://purpose-economy.org/en/whats-steward-ownership