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History News | Company
The whole idea behind employee participation is to enable employees to share in the company’s success while at the same time enhancing their sense of identification with the company. Employees have been able to buy Siemens AG shares on preferred terms since 1969. But the history of staff participation at Siemens goes back much farther than that. So on the occasion of German Ownership Day, we take a look back at a success story that began long before 1969.
Enabling employees to participate in the company’s profits or capital has a long tradition at Siemens. Siemens & Halske employees had their first opportunity to share in the company’s profits back in 1858. Eight years later, Werner von Siemens introduced a “stocktaking bonus,” which enabled Siemens employees to participate in the profits they had helped earn together, above and beyond their regular pay. In 1927, his son Carl Friedrich, who by then was heading the company, lent new impetus to this component of the company’s employee-relations policy by establishing an annual “financial report premium” for non-management employees, depending on the company’s results. After the disruption caused by World War II and a transitional phase for reconstruction, company management decided to reintroduce profit-sharing in 1951.
In the second half of the 1960s, profit-sharing was cut back because of general economic conditions, but it was agreed by way of compensation that the workforce would be able to participate in the company’s producing assets. In 1969, Siemens AG employees in Germany had the chance for the first time to buy employee shares at a preferred price of DM 156 – half the trading price on the stock market on the day when management’s decision was adopted (January 23, 1969). Under the guidelines of Germany’s Employee Shares Act, no social security contributions or other tax was payable on either the difference between the preferred price and the trading price, or on the purchase price itself. Since what was known as the noncash advantage could not exceed DM 500 per person per calendar year, this meant that each employee entitled to participate could buy no more than three Siemens shares. The law also prescribed a lockout period of five years during which the shares could not be sold.
In the spring of 1969, 135,725 employee shares were issued, with a nominal value of DM 6.8 million. This first program was such a success – 24 percent of Siemens employees in Germany took advantage of the “general offer” – that management was encouraged to offer common stock at preferred prices in the coming years as well. From the very start, there had also been thoughts about offering Siemens shares to employees outside Germany. Accordingly, all local companies were free to participate in the share programs if they wished; the local company would absorb the difference between the trading price and the preferred price. But even though a number of companies were interested in this form of employee participation, their acceptance fell through in the face of a great many local circumstances. Only Siemens in the Netherlands began offering employees stock at a preferred price, in 1975.
In Germany, the Siemens share program has established itself over the past nearly 50 years as an integral part of the company’s orientation to its employees; participation since 1989 has averaged about 70 percent. Since demand was so strong, in 2008 corporate management decided to expand staff and management’s participation in the company’s success by creating a share-oriented corporate culture. Under the slogan “Shared Success,” all employees worldwide have a chance, subject to the particular conditions in their own country, to take part in the company’s results. By now, some 165,000 Siemens employees are shareholders – almost one out of every two staff members. Which places them among the company’s largest groups of shareholders.
Sabine Dittler | Ewald Blocher
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