Blackstone aims to empower rank-and-file employees by granting them equity in the companies it acquires.
Executives at the investment giant said this initiative will apply to most employees in all future large US buyouts where Blackstone’s private-equity business gains control.
This move is part of a larger trend in the buyout industry to extend ownership beyond top management.
Blackstone’s $143 billion private-equity business employs over 400,000 people across its portfolio companies.
The program will debut with Copeland, the former climate-technologies unit of Emerson Electric, which Blackstone acquired last year for $14 billion.
Approximately 18,000 Copeland employees will receive equity, provided they remain with the company until it is either sold or goes public.
The equity payout will be linked to Blackstone’s return on the investment.
This initiative mirrors a similar approach taken by rival KKR, which began implementing broad-based employee-ownership programs in 2011.
KKR’s model was later extended to its entire US portfolio and spearheaded the creation of Ownership Works, a nonprofit promoting shared ownership.
Ownership Works, founded by 19 private-equity firms, including KKR, Apollo Global Management, Ares Management, Silver Lake, and TPG, aims to introduce shared ownership at a minimum of three companies per firm by the end of 2023.
Though not a founding partner, Blackstone has already implemented broad-based ownership at companies like Legoland-owner Merlin Entertainments.
Joseph Baratta, Blackstone’s global head of private equity, emphasized that broad-based ownership is part of a larger effort to create opportunities for lower-level workers.
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In 2020, Blackstone launched a program to recruit individuals who might not typically have access to such opportunities, including those without college degrees, military veterans, and refugees.
Baratta stated, “Broad-based equity ownership is just a part of a much more important path in what we’re trying to do across our portfolio.”
Advocates believe broader ownership can help attract and retain workers, especially in a tight labor market.
Proponents say it allows lower-level workers to build wealth and aligns their interests with management and shareholders.
It could lead to better investment outcomes and higher employee engagement and retention.
