Mondragon is the Basque Federation of Cooperatives, which brings together more than 100 democratic organisations. In addition to the companies (including leading high-tech companies), Mondragon is also made up of an ecosystem of support institutions (bank, university, development centre) that work to maintain employee ownership and spread democratic culture and key knowledge among employees. For 68 years, Mondragon has successfully combined economic democracy and competitiveness.

In a nutshell

Prevalence

• ~80.000 employees
• 100+ companies
• Top 10 biggest Spanish companies

Benefits

• Democratic governance
• Individualisation of ownership through individual capital accounts
• All workers can participate

Challenges

• Amount of the mandatory share (~€15,000)
• The model is difficult to scale up in the absence of a supportive environment

sloESOP builds on the Mondragon experience...

Workers' Owners' Co-operative to ensure democratic governance

Like the Mondragon model, the sloESOP model is a cooperative model of employee ownership that ensures democratic governance and open and voluntary membership. Experience shows that democracy in the workplace has many positive effects on the company's performance, while contributing to higher employee satisfaction.

Individualisation of ownership through individual capital accounts 

sloESOP provides employees with the right to the capital value of the company, in addition to the economic right to profit. To this end, it establishes individual capital accounts that record each employee's share of capital. The system of individual capital accounts is present in both Mondragon cooperatives and ESOP companies in the USA.

...and adapt the model to the needs of the Slovenian environment 

Leveraged buyout under the ESOP Fund 

Unlike Mondragon cooperatives, where the employees directly own the company, sloESOP creates a separate legal entity that holds shares in the company on behalf of the employees. The cooperative becomes the owner of the parent company's shares and the employees, as members of the cooperative, are guaranteed all ownership rights. In addition to the partial buy-out, the separate legal entity also allows for a leveraged buy-out, which is a key tool for expanding employee ownership.

Capital value roll-over system

In Mondragon's cooperatives, the entire capital value is paid to the employee on leaving the company, which can lead to liquidity pressures on the company. sloESOP pays out a portion of the capital value periodically according to the date on which it accrues, so that the employee's departure from the company does not trigger an additional financial liability for the company. sloESOP pays out a portion of the capital value periodically according to the date on which it accrues, so that the employee's departure from the company does not trigger an additional financial liability for the company. "Roll-over thus allows for a more predictable and sustainable management of the liquidity requirement in the event of employee turnover.

Inclusivity

The compulsory share of Mondragon cooperatives, which can be up to €15,000, represents a significant financial burden that discourages many employees from joining. In the sloESOP model, the mandatory share cannot exceed 10% of the average monthly gross wage in the Republic of Slovenia for the previous year, which ensures that all employees have the opportunity to participate in the ownership.

Read more about the sloESOP model here.

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Supported by the ACF Programme in Slovenia 2014-2021.

Read more about the project here.