Blackstone Inc. (NYSE:BX) is reportedly initiating a plan to grant equity to the majority of employees at its U.S. buyout companies.
The decision will be announced at an investor conference this week and will apply to all new acquisitions where Blackstone's private-equity division takes control, reported The Wall Street Journal.
Blackstone, whose private-equity portfolio encompasses over 400,000 employees, aims to broaden ownership beyond just management ranks, the report added.
The program will begin with the 18,000 employees of Copeland, a climate-technologies unit purchased from Emerson Electric Co (NYSE:EMR) for $14 billion last year.
Employees must remain with their company until Blackstone either sells it or takes it public to qualify for the equity incentives. The payout amount will depend on Blackstone's return on its investment.
The initiative is part of a wider trend within the buyout industry to include more employees in ownership. KKR & Co Inc (NYSE:KKR), another major private-equity firm, started broad-based employee ownership programs in 2011.
KKR's model was expanded through a nonprofit called Ownership Works, which aims to promote shared ownership among companies.
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Ownership Works, launched by Pete Stavros of KKR, has 19 founding private-equity partners, including KKR, Apollo Global Management (NYSE:APO), Ares Management, Silver Lake, and TPG Inc (NASDAQ:TPG).
Each partner committed to introducing shared ownership in at least three companies by the end of 2023.
Notably, Blackstone is not a listed partner but has similar programs in place at some companies like Merlin Entertainments, per the report.
Advocates of broader employee ownership argue that it can attract and retain workers in a competitive labor market, help lower-level employees build wealth, and better align their interests with those of management and shareholders.
Blackstone stock has gained more than 50% in the last 12 months. Investors can gain exposure to the stock via First Trust Growth Strength ETF (NASDAQ:FTGS) and Amplify AI Powered Equity ETF (NYSE:AIEQ).
Price Action: BX shares closed higher by 1.62% at $127.71 on Tuesday.
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